Aave CPM Price Provider

1 Document Change Log

Version Date Description
1.0 2020-05-05 Initial report
1.1 2020-05-20 Updated for fixes

2 Executive Summary

This report presents the results of our assessment of Aave’s Constant Product Market Price Provider (CPMPP), which is an extension to the existing protocol. The CPMPP acts as an oracle, calculating the price in ETH of a liquidity token, which enables the holder to withdraw a portion of the liquidity from an on-chain automated market maker (AMM) such as Uniswap.

The assesment was conducted from May 1 to May 18, 2020 by John Mardlin and Alexander Wade as part of an ongoing engagement between Aave and ConsenSys Diligence. The objective of this collaboration is a more agile and iterative approach to smart contract security vs. the ‘security last’ approach currently dominating in the industry.

A total of 20 hours were spent on the assessment. Although the code assessed is quite small, time was allocated towards learning about the role of this contract in the larger Aave system, as well as Chainlink and the security properties necessary for an on-chain oracle.

3 Scope

Our review focused on a single file CmpPriceProvider.sol. We looked at two iterations of the file.

3.1 Objectives

We focused on the following objectives for our review of the CmpPriceProvider:

  1. Ensure the absence of known security vulnerabilities
  2. Ensure the contract satisfies the critical requirements of an oracle:
    1. Availability: it returns a value when requested.
    2. Integrity/Authenticity: it returns the correct value.

In particular, the Aave team requested that we confirm that the CPMPP is not subject to oracle manipulation attacks such as those which have been recently observed using flash loans.

4 Discussion

4.1 Assessment of Price Manipulation Attack Feasibility

The CpmPriceProvider contract calculates the price in ETH of a Uniswap liquidity token (UNI) using data from Uniswap and Chainlink. Ignoring constants, the formula is roughly:

LiqPrice = (EthReserve + TokenReserve*Price)/Liquidity

Where the symbols above are defined as:

Symbol Property Data Source
EthReserve Eth Value in Reserve exchange.balance
TokenReserve Tokens in Reserve Token.balanceOf(exchange)
Price Price of Token in ETH Chainlink Oracle
Liquidity Total supply of liquidity tokens exchange.totalSupply()
LiqPrice Price of Liquidity Tokens in Eth calculated

An attacker could attempt to manipulate the value of LiqPrice in one of two ways:

  1. Trade Eth/Tokens
  2. Add or remove liquidity tokens

Our investigation concluded that manipulation was indeed possible, (see issue 6.1).

In the follow up review, a fix was introduced which detects manipulation by comparing the price derived from the state of the Uniswap exchange to the price provided by the Chainlink oracle. If the prices differ significantly, the Chainlink price is taken as correct, and used to derive the proper asset balance for that price.

The improved design with manipulation detection may still have issues at times of high price volatility. At such times, the ethereum network also tends to be congested, making it likely that the Chainlink oracle will not be current. It is even quite possible that arbitrageurs would rebalance Uniswap before the Chainlink price is updated, so that Uniswap will have a more accurate price.

In the case that Uniswap is more current than Chainlink, the CPMPriceProvider would use the incorrect Chainlink price to determine the value of the CPM tokens. However the error margin would be limited to the size of the price change in real world markets, which are much more difficult to manipulate than Uniswap (thought not impossible). A sufficiently large over-collateralization requirement should be enough to protect against opportunistic borrowers seeking to take under-collateralized loans during times of high volatility and chain congestion.

5 Recommendations

In order to understand the risk of the Chainlink oracle deviating significantly, it would be helpful to compare historical prices on Chainlink when prices are moving rapidly, and see what the largest historical delta is compared to the live price on a large exchange.

Update: The Aave team has evaluated the behavior of the price provider and believes that in the worst case, the CPMPriceProvider’s performance will match that of the oracle for the underlying currency (ex. Chainlink’s DAI/ETH aggregrator) in the UNI pair.

5.2 Expand on existing code comments

The Natspec comments in the codebase are quite minimal. On the latestAnswer() question in particular, additional information on the rationale for the price calculation would be helpful.

Update: More Natspec comments have been added since this reccomendation was first made.

5.3 Provide a specification

Even for small changes, a specification should be created outlining:

  1. Motivation for the change
  2. High level design details and assumptions
  3. Key security properties

This does not need to be a long or formal document, it can fit easily into a Pull Request or Issue message. The important thing is that it provides a description of the intended behavior, and allows other members of the team to review and agree on the details. Including a brief discussion of security properties may help to anticipate and avoid potential vulnerabilities or errors.

Update: A specification was provided along with the change to address the price manipulation issue in the first iteration of this report.

6 Issues

The issues are presented in approximate order of priority from highest to lowest.

6.1 CPM token price is susceptible to manipulation Addressed


Addressed by checking for deviation from Chainlink price.


The calculation of the CPM token price is based on the combined value of the Ether and ERC20 Token liquidity that can be withdrawn per CPM token.

This can be represented simply as Price = (EtherValue + TokenAmount*EthPriceOfToken) / CpmTotalSupply, where EthPriceOfToken is taken from the chainlink oracle.

However this calculation does not properly account for the Constant Price Model which is susceptible to price slippage at larger trading volumes. This would enable an attacker to make a large trade (possibly funded by a Flash Loan), shifting the balance of the ETH and Token reserves, and reducing the real value of the liquidity held in the exchange.

One way to think of this is that for any given price, there is a “correct” ratio of ETH to Token in the reserve.

The consequence of this issue is that the wrong price is returned, which breaks the security model of this contract.

6.2 Underflow if TOKEN_DECIMALS are greater than 18 Addressed


The development team has indicated that less than 18 decimals is a design assumption of the system.

We recommend documenting this assumption clearly in the code.


In latestAnswer(), the assumption is made that TOKEN_DECIMALS is less than 18:


(_ethBalanceOfCpmToken.mul(1 ether)  + _tokenBalanceOfCpmToken.mul(_unsignedTokenPrice).mul(10**(18-TOKEN_DECIMALS)))

If there are greater than 18 decimals, then this value will underflow to a number close to MAX_UINT.


Add a simple check to the constructor to ensure the added token has 18 decimals or less.

Appendix 1 - Files in Scope

This assessment covered the following files:

A.1.1 Initial state

File SHA-1 hash
contracts/proxies/CmpPriceProvider.sol 0e3c925cac3c962ccf3c3affd78fbcde8ceafcf9

A.1.2 Final State

File SHA-1 hash
contracts/proxies/CmpPriceProvider.sol 82b3d7e7f0fe7ca76e131f4f214fc9f6e81d34ab

Appendix 2 - Disclosure

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