0x Exchange v4

1 Executive Summary

This report presents the results of our engagement with 0x Labs to review version 4 of the 0x Exchange smart contracts.

The review was conducted by Steve Marx and Nicholas Ward over the course of four person-weeks between November 30th and December 11th, 2020.

2 Scope

Our review focused on the commit hash 475b608338561a1dce3199bfb9fb59ee9372149b and was limited to the protocol v4 smart contracts (contracts/zero-ex in the linked repository). Notably, the scope excluded all transformer contracts, staking contracts, and any existing live deployments of the protocol contracts. The complete list of files in scope can be found in the Appendix.

3 System Overview

0x provides detailed documentation of the system. In brief:

• The exchange proxy is an efficient upgradeability mechanism that allows different features to be deployed, upgraded, and rolled back on a function-by-function basis.
• The functionality behind this proxy enables traders (market makers and takers) to swap arbitrary ERC20 tokens at prices they set and to interact with 1st-party and 3rd-party automated liquidity providers (such as Uniswap or 0x’s PLP).
• Market makers interact with the system by offering cryptographically signed trades.
• Takers accept a market maker’s trade by submitting it to the exchange, either directly or as a metatransaction through a relayer.

4 Security Specification

This section describes, from a security perspective, the expected behavior of the system under audit. It is not a substitute for documentation. The purpose of this section is to identify specific security properties that were validated by the audit team.

4.1 Actors

The relevant actors are listed below with their respective abilities:

• Market makers provide liquidity to the system. They cryptographically sign orders, which offer to trade a quantity of a maker token for a different quantity of a taker token. Makers can offer limit orders and RFQ orders. These are broadly similar, but the latter is restricted in terms of what transaction origin can take the trade.
• Takers accept the trades offered by market makers. They submit these trades to a smart contract, which settles the trades by transferring tokens between the taker and maker. Takers can also trade with external entities via functions like sellToUniswap(), which directly trades with the Uniswap automated liquidity protocol.
• Relayers The exchange supports metatransactions, where a third-party relayer submits a transaction on behalf of a trader.
• The system owner has special privileges, such as deploying new features. In the deployed configuration, the owner is a multisig wallet that implements a time lock to prevent sudden unexpected changes to the system.

4.2 Trust Model

In any system, it’s important to identify what trust is expected/required between various actors. For this audit, we established the following trust model:

• The exchange owner is a multisig wallet controlled by 0x Labs. This wallet and the associated governance system are out of scope for this audit, but it is expected that traders do not need to trust 0x Labs. Changes are voted on by the community and then bound to a significant time lock, which gives users a chance to see changes coming before they are applied.
• Traders (both makers and takers) should not need to trust each other. If a maker signs an order, they expect that funds can only be transferred away from them under the terms of that order. Similarly, a taker only pays when the trade happens as specified in the order. No one should be able to cause a trader to participate in a trade they didn’t agree to.

4.3 Security Properties

The following is a non-exhaustive list of security properties that were verified in this audit:

• Orders should not be able to be overfilled (filled beyond the taker or maker amounts specified).
• Only orders properly signed by their makers should be fillable.
• A given metatransaction should only be executed once.
• Canceled or expired orders should not be filled.
• Calls to external systems (e.g. Uniswap, PLP, and transformers) should be guarded such that only outcomes acceptable to the taker can occur.
• Protocol fees are taken when limit orders are filled. These fees are then sent to a staking contract, which is out of scope for this audit.

5 Recommendations

/// @dev Execute a meta-transaction via `sender`. Privileged variant.
///      Only callable from within.
/// @param sender Who is executing the meta-transaction.
/// @param mtx The meta-transaction.
/// @param signature The signature by `mtx.signer`.
/// @return returnResult The ABI-encoded result of the underlying call.
function _executeMetaTransaction(
    address sender,
    MetaTransactionData memory mtx,
    LibSignature.Signature memory signature
)
    public
    payable
    override
    onlySelf
    returns (bytes memory returnResult)
{
    ExecuteState memory state;
    state.sender = sender;
    state.mtx = mtx;
    state.hash = getMetaTransactionHash(mtx);
    state.signature = signature;

    return _executeMetaTransactionPrivate(state);
}

// Leave 1 wei behind to avoid expensive zero-->non-zero state change.

// Cap the gas limit to prvent all gas being consumed
// if the token reverts.

if iszero(eq(callvalue(), sellAmount)) {
    revert(0, 0)
}

6 Findings

Each issue has an assigned severity:

• Minor issues are subjective in nature. They are typically suggestions around best practices or readability. Code maintainers should use their own judgment as to whether to address such issues.
• Medium issues are objective in nature but are not security vulnerabilities. These should be addressed unless there is a clear reason not to.
• Major issues are security vulnerabilities that may not be directly exploitable or may require certain conditions in order to be exploited. All major issues should be addressed.
• Critical issues are directly exploitable security vulnerabilities that need to be fixed.

/// @dev Refunds up to `msg.value` leftover ETH at the end of the call.
modifier refundsAttachedEth() {
    _;
    uint256 remainingBalance =
        LibSafeMathV06.min256(msg.value, address(this).balance);
    if (remainingBalance > 0) {
        msg.sender.transfer(remainingBalance);
    }
}

if (inputToken == ETH_TOKEN_ADDRESS) {
    provider.transfer(sellAmount);

// `token.allowance()``
mstore(0xB00, ALLOWANCE_CALL_SELECTOR_32)
mstore(0xB04, caller())
mstore(0xB24, address())
let success := call(gas(), token, 0, 0xB00, 0x44, 0xC00, 0x20)

// Call pair.getReserves(), store the results at `0xC00`
mstore(0xB00, UNISWAP_PAIR_RESERVES_CALL_SELECTOR_32)
if iszero(staticcall(gas(), pair, 0xB00, 0x4, 0xC00, 0x40)) {
    bubbleRevert()
}

// Check if we have enough direct allowance by calling
// `token.allowance()``
mstore(0xB00, ALLOWANCE_CALL_SELECTOR_32)
mstore(0xB04, caller())
mstore(0xB24, address())
let success := call(gas(), token, 0, 0xB00, 0x44, 0xC00, 0x20)

if lt(returndatasize(), EXPECTED_SIZE) {
    revert(0, 0) 
}
returndatacopy(0xC00, 0x00, EXPECTED_SIZE)

Appendix 1 - Files in Scope

This audit covered the following files:

Appendix 2 - Disclosure

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