Our security team reviewed 12 DeFi protocols in July. Here are the 5 most critical vulnerabilities we discovered — and how they were fixed.
Our Web3 security team audited 12 DeFi protocols last month. The findings were eye-opening. Here are five of the most critical issues we uncovered.
Vulnerability #1: Unchecked External Calls
In three protocols, external contract calls were made without verifying the return value. An attacker could deploy a malicious contract that always returns success while silently failing.
**Fix:** Always use require() to validate external call return values.
Vulnerability #2: Flash Loan Price Manipulation
Two lending protocols relied on a single AMM pool as their price oracle. An attacker could manipulate the price within a single transaction using a flash loan.
**Fix:** Use time-weighted average price (TWAP) oracles from Chainlink or Uniswap V3.
Vulnerability #3: Missing Slippage Protection
Four DEX integrations lacked slippage checks, exposing users to sandwich attacks where bots front-run and back-run their trades.
**Fix:** Implement minimum output amount checks and user-defined slippage tolerance.
Vulnerability #4: Centralized Admin Key
Two protocols had a single admin key that could drain all funds, pause the contract, or upgrade to a malicious implementation.
**Fix:** Use a multi-sig wallet (Gnosis Safe) with a timelock delay for sensitive admin actions.
Vulnerability #5: Incorrect Decimal Handling
One protocol mixed 6-decimal USDC with 18-decimal ETH without proper conversion, leading to a 1,000,000,000,000x price discrepancy.
**Fix:** Always normalize token decimals before performing arithmetic comparisons.
If you're launching a DeFi protocol, don't skip the audit. [Contact CodixSol](/smart-contract-audit) for a comprehensive security review.
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