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Compound

93%

Previous versions

Process Quality Review (0.8)

Compound

Final score:93%
Date:08 Apr 2022
Audit Process:version 0.8
Author:Nicolas Vyncke
PQR Score:93%

PASS

Protocol Website:https://compound.finance/

Hack History

Date:29 Sep 2021
Details: Compound Finance was exploited for a total of $147m due to a vulnerability within a newly updated Compound Comptroller vault. Specifically, the drip() function could be called repeatedly by users which would fill up the vault with more COMP rewards. Users could then withdraw overly inflated rewards. This is not too unlike an infinite mint.
Reference Linklink

Scoring Appendix

The final review score is indicated as a percentage. The percentage is calculated as Achieved Points due to MAX Possible Points. For each element the answer can be either Yes/No or a percentage. For a detailed breakdown of the individual weights of each question, please consult this document.

The blockchain used by this protocol
Ethereum
#QuestionAnswer
100%
1.100%
2.100%
3.Yes
4.100%
5.100
94%
6.Yes
7.Yes
8.100%
9.60%
90%
10.100%
11.50%
12.Yes
13.100%
14.Yes
15.Yes
95%
16.100%
17.60%
84%
18.100%
19.100%
20.100%
21.0%
22.100%
23.80%
24.100%
25.100%
100%
26.100%
27.Yes
28.Yes
Total:93%

Very simply, the audit looks for the following declarations from the developer's site. With these declarations, it is reasonable to trust the smart contracts.

  • Here is my smart contract on the blockchain
  • You can see it matches a software repository used to develop the code
  • Here is the documentation that explains what my smart contract does
  • Here are the tests I ran to verify my smart contract
  • Here are the audit(s) performed to review my code by third party experts

This report is for informational purposes only and does not constitute investment advice of any kind, nor does it constitute an offer to provide investment advisory or other services. Nothing in this report shall be considered a solicitation or offer to buy or sell any security, token, future, option or other financial instrument or to offer or provide any investment advice or service to any person in any jurisdiction. Nothing contained in this report constitutes investment advice or offers any opinion with respect to the suitability of any security, and the views expressed in this report should not be taken as advice to buy, sell or hold any security. The information in this report should not be relied upon for the purpose of investing. In preparing the information contained in this report, we have not taken into account the investment needs, objectives and financial circumstances of any particular investor. This information has no regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this information and investments discussed may not be suitable for all investors.

Any views expressed in this report by us were prepared based upon the information available to us at the time such views were written. The views expressed within this report are limited to DeFiSafety and the author and do not reflect those of any additional or third party and are strictly based upon DeFiSafety, its authors, interpretations and evaluation of relevant data. Changed or additional information could cause such views to change. All information is subject to possible correction. Information may quickly become unreliable for various reasons, including changes in market conditions or economic circumstances.

This completed report is copyright (c) DeFiSafety 2021. Permission is given to copy in whole, retaining this copyright label.

Smart Contracts & Team

100%

This section looks at the code deployed on the relevant chain that gets reviewed and its corresponding software repository. The document explaining these questions is here.

1. Are the smart contract addresses easy to find? (%)

Answer: 100%

They can be easily be found at https://compound.finance/docs#networks, as indicated in the Appendix.

Percentage Score Guidance:
100%
Clearly labelled and on website, documents or repository, quick to find
70%
Clearly labelled and on website, docs or repo but takes a bit of looking
40%
Addresses in mainnet.json, in discord or sub graph, etc
20%
Address found but labeling not clear or easy to find
0%
Executing addresses could not be found

2. How active is the primary contract? (%)

Answer: 100%

Contract Comptroller is used over 50 times a day, as indicated in the Appendix.

Percentage Score Guidance:
100%
More than 10 transactions a day
70%
More than 10 transactions a week
40%
More than 10 transactions a month
10%
Less than 10 transactions a month
0%
No activity

3. Does the protocol have a public software repository? (Y/N)

Answer: Yes

Compound's GitHub can be found here.

Score Guidance:
Yes
There is a public software repository with the code at a minimum, but also normally test and scripts. Even if the repository was created just to hold the files and has just 1 transaction.
No
For teams with private repositories.

4. Is there a development history visible? (%)

Answer: 100%

With 76 commits and 32 commits, Compound has a GitHub repository that is heavily interfaced with.

Percentage Score Guidance:
100%
Any one of 100+ commits, 10+branches
70%
Any one of 70+ commits, 7+branches
50%
Any one of 50+ commits, 5+branches
30%
Any one of 30+ commits, 3+branches
0%
Less than 2 branches or less than 30 commits

5. Is the team public (not anonymous)?

Answer: 100

Many public team contributors were identified in Compound Labs' LinkedIn page.

Score Guidance:
100%
At least two names can be easily found in the protocol's website, documentation or medium. These are then confirmed by the personal websites of the individuals / their linkedin / twitter.
50%
At least one public name can be found to be working on the protocol.
0%
No public team members could be found.

Documentation

94%

This section looks at the software documentation. The document explaining these questions is here.

6. Is there a whitepaper? (Y/N)

Answer: Yes

Location: https://compound.finance/docs

7. Is the protocol's software architecture documented? (Y/N)

Answer: Yes

Compound's software architecture is documented in https://compound.finance/docs/ctokens, https://compound.finance/docs/comptroller, and https://compound.finance/docs/governance#introduction.

Score Guidance:
Yes
The documents identify software architecture and contract interaction through any of the following: diagrams, arrows, specific reference to software functions or a written explanation on how smart contracts interact.
No
Protocols receive a "no" if none of these are included.

8. Does the software documentation fully cover the deployed contracts' source code? (%)

Answer: 100%

Compound's software documentation fully covers its smart contract functions for all smart contracts in https://compound.finance/docs/ctokens, https://compound.finance/docs/comptroller, and https://compound.finance/docs/governance#introduction..

Percentage Score Guidance:
100%
All contracts and functions documented
80%
Only the major functions documented
79 - 1%
Estimate of the level of software documentation
0%
No software documentation

9. Is it possible to trace the documented software to its implementation in the protocol's source code? (%)

Answer: 60%

There is a clear association between Compound's code and its documentation, although there is no explicit traceability.

Percentage Score Guidance:
100%
Clear explicit traceability between code and documentation at a requirement level for all code
60%
Clear association between code and documents via non explicit traceability
40%
Documentation lists all the functions and describes their functions
0%
No connection between documentation and code

Testing

90%

10. Has the protocol tested their deployed code? (%)

Answer: 100%

Code examples are in the Appendix at the end of this report.. As per the SLOC, there is 113% testing to code (TtC).    This score is guided by the Test to Code ratio (TtC). Generally a good test to code ratio is over 100%. However, the reviewer's best judgement is the final deciding factor.    Reviewer Note: In addition to the many test files available within Compound's main GitHub repo, we also came across multiple simulation, scenario, and general spec files. This proves to us that additional unit testing and test-in-prod was conducted. We can therefore award Compound 100% instead of 80%, as these tests make up for the 7% missing from the TtC.

Percentage Score Guidance:
100%
TtC > 120% Both unit and system test visible
80%
TtC > 80% Both unit and system test visible
40%
TtC < 80% Some tests visible
0%
No tests obvious

11. How covered is the protocol's code? (%)

Answer: 50%

According to their Codecov report, Compound only has 37% code coverage. However, they do have an impressive testing repository, and therefore they are awarded 50% for this metric according to our guidance found below.

Percentage Score Guidance:
100%
Documented full coverage
99 - 51%
Value of test coverage from documented results
50%
No indication of code coverage but clearly there is a complete set of tests
30%
Some tests evident but not complete
0%
No test for coverage seen

12. Does the protocol provide scripts and instructions to run their tests? (Y/N)

Answer: Yes

Scripts/Instructions location: https://github.com/compound-finance/compound-protocol/tree/master/script

Score Guidance:
Yes
Scripts and/or instructions to run tests are available in the testing suite
No
Scripts and/or instructions to run tests are not available in the testing suite

13. Is there a detailed report of the protocol's test results?(%)

Answer: 100%

Compound has very in-depth testing report within their external CircleCI page.

Percentage Score Guidance:
100%
Detailed test report as described below
70%
GitHub code coverage report visible
0%
No test report evident

14. Has the protocol undergone Formal Verification? (Y/N)

Answer: Yes

Compound has undergone a Formal Verification test performed by Certora.

Score Guidance:
Yes
Formal Verification was performed and the report is readily available
No
Formal Verification was not performed and/or the report is not readily available.

15. Were the smart contracts deployed to a testnet? (Y/N)

Answer: Yes

Compound has been deployed to multiple testnets.

Score Guidance:
Yes
Protocol has proved their tesnet usage by providing the addresses
No
Protocol has not proved their testnet usage by providing the addresses

Security

95%

This section looks at the 3rd party software audits done. It is explained in this document.

16. Is the protocol sufficiently audited? (%)

Answer: 100%

Compound has had consistent audits through their development as documented on their site. They have audits from two top level audit organizations. The audits are public and they have implemented findings in order to improve their code. In addition, numerous audits were released previous to their latest deployment.

Percentage Score Guidance:
100%
Multiple Audits performed before deployment and the audit findings are public and implemented or not required
90%
Single audit performed before deployment and audit findings are public and implemented or not required
70%
Audit(s) performed after deployment and no changes required. The Audit report is public.
65%
Code is forked from an already audited protocol and a changelog is provided explaining why forked code was used and what changes were made. This changelog must justify why the changes made do not affect the audit.
50%
Audit(s) performed after deployment and changes are needed but not implemented.
30%
Audit(s) performed are low-quality and do not indicate proper due diligence.
20%
No audit performed
0%
Audit Performed after deployment, existence is public, report is not public OR smart contract address' not found.
Deduct 25% if the audited code is not available for comparison.

17. Is the bounty value acceptably high (%)

Answer: 60%

Compound offers an active bug bounty of $50K. The protocol also offers an inactive bug bounty of up to $150k.

Percentage Score Guidance:
100%
Bounty is 10% TVL or at least $1M AND active program (see below)
90%
Bounty is 5% TVL or at least 500k AND active program
80%
Bounty is 5% TVL or at least 500k
70%
Bounty is 100k or over AND active program
60%
Bounty is 100k or over
50%
Bounty is 50k or over AND active program
40%
Bounty is 50k or over
20%
Bug bounty program bounty is less than 50k
0%
No bug bounty program offered / the bug bounty program is dead
An active program means that a third party (such as Immunefi) is actively driving hackers to the site. An inactive program would be static mentions on the docs.

Admin Controls

84%

This section covers the documentation of special access controls for a DeFi protocol. The admin access controls are the contracts that allow updating contracts or coefficients in the protocol. Since these contracts can allow the protocol admins to "change the rules", complete disclosure of capabilities is vital for user's transparency. It is explained in this document.

18. Is the protocol's admin control information easy to find?

Answer: 100%

Compound's Admin Control information is documented at this location. This was quick to find.

Percentage Score Guidance:
100%
Admin Controls are clearly labelled and on website, docs or repo, quick to find
70%
Admin Controls are clearly labelled and on website, docs or repo but takes a bit of looking
40%
Admin Control docs are in multiple places and not well labelled
20%
Admin Control docs are in multiple places and not labelled
0%
Admin Control information could not be found

19. Are relevant contracts clearly labelled as upgradeable or immutable? (%)

Answer: 100%

Compound's core smart contracts, Comptroller and any cToken are explicitly identified as upgradeable through GovernorBravo and the COMP token. In addition, its governable nature effectively makes the protocol non-custodial, therefore making any functions or contracts that handle any user funds immutable. As such, 100% will be given for this question.

Percentage Score Guidance:
100%
Both the contract documentation and the smart contract code state that the code is not upgradeable or immutable.
80%
All Contracts are clearly labelled as upgradeable (or not)
50%
Code is immutable but not mentioned anywhere in the documentation
0%
Admin control information could not be found

20. Is the type of smart contract ownership clearly indicated? (%)

Answer: 100%

Compound's community ownership through a rigorous governance module is clearly indicated in their documentation.

Percentage Score Guidance:
100%
The type of ownership is clearly indicated in their documentation. (OnlyOwner / MultiSig / etc)
50%
The type of ownership is indicated, but only in the code. (OnlyOwner / MultiSig / etc)
0%
Admin Control information could not be found

21. Are the protocol's smart contract change capabilities described? (%)

Answer: 0%

Compound's smart contract change capabilities are vaguely described as "system parameters, support new markets, or add entirely new functionality to the protocol". More in-depth information is required in order to give a score for this question.

Percentage Score Guidance:
100%
The documentation covers the capabilities for change for all smart contracts
50%
The documentation covers the capabilities for change in some, but not all contracts
0%
The documentation does not cover the capabilities for change in any contract

22. Is the protocol's admin control information easy to understand? (%)

Answer: 100%

Compound makes it clear that the community owns the protocol, therefore clearly making it non-custodial. As such, 100% will be given for this question.

Percentage Score Guidance:
100%
All the contracts are immutable
90%
Description relates to investments safety in clear non-software language
30%
Description all in software-specific language
0%
No admin control information could be found

23. Is there sufficient Pause Control documentation? (%)

Answer: 80%

Compound's Pause Guardian is documented and adequately explained in their governance docs. There is no evidence of testing i.e. fire drill.

Percentage Score Guidance:
100%
Pause control(s) are clearly documented and there is records of at least one test within 3 months
80%
Pause control(s) explained clearly but no evidence of regular tests
40%
Pause controls mentioned with no detail on capability or tests
0%
Pause control not documented or explained

24. Is there sufficient Timelock documentation? (%)

Answer: 100%

Compound has adequate timelock documentation which can be found at this location.

Percentage Score Guidance:
100%
Documentation identifies and explains why the protocol does not need a Timelock OR Timelock documentation identifies its duration, which contracts it applies to and justifies this time period.
60%
A Timelock is identified and its duration is specified
30%
A Timelock is identified
0%
No Timelock information was documented

25. Is the Timelock of an adequate length? (Y/N)

Answer: 100%

Compound's timelock is of a relevant length (minimum 48h), as specified in this location.

Percentage Score Guidance:
100%
Timelock is between 48 hours to 1 week OR justification as to why no Timelock is needed / is outside this length.
50%
Timelock is less than 48 hours or greater than 1 week.
0%
No Timelock information was documented OR no timelock length was identified.

Oracles

100%

This section goes over the documentation that a protocol may or may not supply about their Oracle usage. Oracles are a fundamental part of DeFi as they are responsible for relaying tons of price data information to thousands of protocols using blockchain technology. Not only are they important for price feeds, but they are also an essential component of transaction verification and security. These questions are explained in this document.

26. Is the protocol's Oracle sufficiently documented? (%)

Answer: 100%

Compound's oracle source is documented at this location. The contracts dependent on price feeds are identified, and there is relevant software function documentation included.

Percentage Score Guidance:
100%
If it uses one, the Oracle is specified. The contracts dependent on the oracle are identified. Basic software functions are identified (if the protocol provides its own price feed data). Timeframe of price feeds are identified. OR The reason as to why the protocol does not use an Oracle is identified and explained.
75%
The Oracle documentation identifies both source and timeframe, but does not provide additional context regarding smart contracts.
50%
Only the Oracle source is identified.
0%
No oracle is named / no oracle information is documented.

27. Is front running mitigated by this protocol? (Y/N)

Answer: Yes

Compound mitigates front running through transaction fees, and a combination of Chainlink oracles and Uniswap's TWAP which would effectively require the front running of multiple price feeds. Although it is not explicitly stated in Compound's documentation, the protocol's architecture naturally makes front running difficult and expensive, which can disincentivize front runners with nefarious intentions.

Score Guidance:
Yes
The protocol cannot be front run and there is an explanation as to why OR documented front running countermeasures are implemented.
No
The Oracle documentation identifies both source and timeframe, but does not provide additional context regarding smart contracts.

28. Can flashloan attacks be applied to the protocol, and if so, are those flashloan attack risks mitigated? (Y/N)

Answer: Yes

Compound mitigates the possibilities of flash loan / liquidity manipulations via a combination of Chainlink oracles and Uniswap v2 TWAP sanity checks, therefore ensuring "truthful" price data.

Score Guidance:
Yes
The protocol's documentation includes information on how they mitigate the possibilities and extents of flash loan attacks.
No
The protocol's documentation does not include any information regarding the mitigation of flash loan attacks.

Appendices

1contract Comptroller is ComptrollerV7Storage, ComptrollerInterface, ComptrollerErrorReporter, ExponentialNoError {
2    /// @notice Emitted when an admin supports a market
3    event MarketListed(CToken cToken);
4
5    /// @notice Emitted when an account enters a market
6    event MarketEntered(CToken cToken, address account);
7
8    /// @notice Emitted when an account exits a market
9    event MarketExited(CToken cToken, address account);
10
11    /// @notice Emitted when close factor is changed by admin
12    event NewCloseFactor(uint oldCloseFactorMantissa, uint newCloseFactorMantissa);
13
14    /// @notice Emitted when a collateral factor is changed by admin
15    event NewCollateralFactor(CToken cToken, uint oldCollateralFactorMantissa, uint newCollateralFactorMantissa);
16
17    /// @notice Emitted when liquidation incentive is changed by admin
18    event NewLiquidationIncentive(uint oldLiquidationIncentiveMantissa, uint newLiquidationIncentiveMantissa);
19
20    /// @notice Emitted when price oracle is changed
21    event NewPriceOracle(PriceOracle oldPriceOracle, PriceOracle newPriceOracle);
22
23    /// @notice Emitted when pause guardian is changed
24    event NewPauseGuardian(address oldPauseGuardian, address newPauseGuardian);
25
26    /// @notice Emitted when an action is paused globally
27    event ActionPaused(string action, bool pauseState);
28
29    /// @notice Emitted when an action is paused on a market
30    event ActionPaused(CToken cToken, string action, bool pauseState);
31
32    /// @notice Emitted when a new borrow-side COMP speed is calculated for a market
33    event CompBorrowSpeedUpdated(CToken indexed cToken, uint newSpeed);
34
35    /// @notice Emitted when a new supply-side COMP speed is calculated for a market
36    event CompSupplySpeedUpdated(CToken indexed cToken, uint newSpeed);
37
38    /// @notice Emitted when a new COMP speed is set for a contributor
39    event ContributorCompSpeedUpdated(address indexed contributor, uint newSpeed);
40
41    /// @notice Emitted when COMP is distributed to a supplier
42    event DistributedSupplierComp(CToken indexed cToken, address indexed supplier, uint compDelta, uint compSupplyIndex);
43
44    /// @notice Emitted when COMP is distributed to a borrower
45    event DistributedBorrowerComp(CToken indexed cToken, address indexed borrower, uint compDelta, uint compBorrowIndex);
46
47    /// @notice Emitted when borrow cap for a cToken is changed
48    event NewBorrowCap(CToken indexed cToken, uint newBorrowCap);
49
50    /// @notice Emitted when borrow cap guardian is changed
51    event NewBorrowCapGuardian(address oldBorrowCapGuardian, address newBorrowCapGuardian);
52
53    /// @notice Emitted when COMP is granted by admin
54    event CompGranted(address recipient, uint amount);
55
56    /// @notice Emitted when COMP accrued for a user has been manually adjusted.
57    event CompAccruedAdjusted(address indexed user, uint oldCompAccrued, uint newCompAccrued);
58
59    /// @notice Emitted when COMP receivable for a user has been updated.
60    event CompReceivableUpdated(address indexed user, uint oldCompReceivable, uint newCompReceivable);
61
62    /// @notice The initial COMP index for a market
63    uint224 public constant compInitialIndex = 1e36;
64
65    // closeFactorMantissa must be strictly greater than this value
66    uint internal constant closeFactorMinMantissa = 0.05e18; // 0.05
67
68    // closeFactorMantissa must not exceed this value
69    uint internal constant closeFactorMaxMantissa = 0.9e18; // 0.9
70
71    // No collateralFactorMantissa may exceed this value
72    uint internal constant collateralFactorMaxMantissa = 0.9e18; // 0.9
73
74    constructor() public {
75        admin = msg.sender;
76    }
77
78    /*** Assets You Are In ***/
79
80    /**
81     * @notice Returns the assets an account has entered
82     * @param account The address of the account to pull assets for
83     * @return A dynamic list with the assets the account has entered
84     */
85    function getAssetsIn(address account) external view returns (CToken[] memory) {
86        CToken[] memory assetsIn = accountAssets[account];
87
88        return assetsIn;
89    }
90
91    /**
92     * @notice Returns whether the given account is entered in the given asset
93     * @param account The address of the account to check
94     * @param cToken The cToken to check
95     * @return True if the account is in the asset, otherwise false.
96     */
97    function checkMembership(address account, CToken cToken) external view returns (bool) {
98        return markets[address(cToken)].accountMembership[account];
99    }
100
101    /**
102     * @notice Add assets to be included in account liquidity calculation
103     * @param cTokens The list of addresses of the cToken markets to be enabled
104     * @return Success indicator for whether each corresponding market was entered
105     */
106    function enterMarkets(address[] memory cTokens) public returns (uint[] memory) {
107        uint len = cTokens.length;
108
109        uint[] memory results = new uint[](len);
110        for (uint i = 0; i < len; i++) {
111            CToken cToken = CToken(cTokens[i]);
112
113            results[i] = uint(addToMarketInternal(cToken, msg.sender));
114        }
115
116        return results;
117    }

JavaScript Tests

Language
Files
Lines
Blanks
Comments
Testing Code
Deployed Code
Complexity
JavaScript
84
13223
2077
628
10518
9278
411

Tests to Code: 10518 / 9278 = 113 %