# Decimals of LendingPool don't take into account the offset introduced by VIRTUAL_SHARES Medium · Code4rena · Money market · 15th December, 2023 Finding M-02 of the INIT Capital security review. - Protocol: https://init.capital/ - Report: /reports/init-capital-ii - Codebase: https://github.com/0xsimao/2023-12-initcapital/tree/a53e401529451b208095b3af11862984d0b32177 - Source: https://code4rena.com/reports/2023-12-initcapital --- The impact of this finding is more on the marketing/data fetching side, on exchanges it would appear that the shares are worth less `VIRTUAL_SHARES` than the underlying token. Given that it would influence the perception of the value of the shares token, medium severity seems appropriate. ### Proof of Concept The Openzeppelin [implementation](https://github.com/OpenZeppelin/openzeppelin-contracts/blob/master/contracts/token/ERC20/extensions/ERC4626.sol#L106-L108) includes the decimals offset (log10(`VIRTUAL_SHARES`) in LendingPool) in the `decimals()` function. However, INIT only places the decimals of the [underlying](https://github.com/code-423n4/2023-12-initcapital/blob/main/contracts/lending_pool/LendingPool.sol#L95-L97). A POC was built, add it to `TestLendingPool.sol`: ``` function test_POC_WrongDecimals() public { uint256 _wbtcAmount = 3e8; // 3 BTC address _user = makeAddr("user"); _mintPool(_user, WBTC, _wbtcAmount); uint256 _wbtcDecimals = 1e8; uint256 VIRTUAL_SHARES = 1e8; uint256 _poolDecimals = 10**lendingPools[WBTC].decimals(); uint256 _userBalance = lendingPools[WBTC].balanceOf(_user); assertEq(_userBalance/_poolDecimals, _wbtcAmount/_wbtcDecimals*VIRTUAL_SHARES); assertEq(_userBalance/_poolDecimals, 3e8); assertEq(_userBalance, _wbtcAmount*VIRTUAL_SHARES); } ``` ### Tools Used Vscode, Foundry ### Recommended Mitigation Steps Include the virtual shares decimals in the `decimals()` function: ``` uint private constant VIRTUAL_SHARES = 8; ... function decimals() public view override returns (uint8) { return IERC20Metadata(underlyingToken).decimals() + VIRTUAL_SHARES; } ... function _toShares(uint _amt, uint _totalAssets, uint _totalShares) internal pure returns (uint shares) { return _amt.mulDiv(_totalShares + 10**VIRTUAL_SHARES, _totalAssets + VIRTUAL_ASSETS); } ... function _toAmt(uint _shares, uint _totalAssets, uint _totalShares) internal pure returns (uint amt) { return _shares.mulDiv(_totalAssets + VIRTUAL_ASSETS, _totalShares + 10**VIRTUAL_SHARES); } ``` --- Related findings: - [Rounding error in Aave Lending Pool](https://0xsimao.com/findings/gaib-rounding-error-aave-lending): GAIB Pre-Vaults - [In GLendingPool, event parameters can be indexed](https://0xsimao.com/findings/glacier-lending-event-parameters-indexed): Glacier - [In GLendingPool, remove incorrect comment](https://0xsimao.com/findings/glacier-lending-remove-incorrect-comment): Glacier - [Attackers can claim deposits to vaults if users specify the router as receiver and don't withdraw shares after](https://0xsimao.com/findings/fuji-finance-deposits-specify-withdraw-shares): Fuji Finance