DeFi Protocol Security Testing

// Example of a flash loan attack on a vulnerable DEX
contract FlashLoanAttack {
    address public owner;
    ILendingPool public lendingPool;
    IVulnerableDEX public vulnerableDEX;
    IERC20 public token;
    
    constructor(address _lendingPool, address _vulnerableDEX, address _token) {
        owner = msg.sender;
        lendingPool = ILendingPool(_lendingPool);
        vulnerableDEX = IVulnerableDEX(_vulnerableDEX);
        token = IERC20(_token);
    }
    
    function executeAttack(uint256 borrowAmount) external {
        // 1. Borrow assets via flash loan
        lendingPool.flashLoan(address(this), borrowAmount, "", 0);
    }
    
    // This function is called by the lending pool after sending the borrowed assets
    function executeOperation(
        address asset,
        uint256 amount,
        uint256 premium,
        address initiator,
        bytes calldata params
    ) external returns (bool) {
        // 2. Use the borrowed assets to manipulate the price on the vulnerable DEX
        token.approve(address(vulnerableDEX), amount);
        vulnerableDEX.swap(amount);
        
        // 3. Exploit the price manipulation to profit
        vulnerableDEX.executeProfitableArbitrage();
        
        // 4. Repay the flash loan with a fee
        uint256 totalDebt = amount + premium;
        token.approve(address(lendingPool), totalDebt);
        
        // 5. Keep the profit
        uint256 profit = token.balanceOf(address(this)) - totalDebt;
        token.transfer(owner, profit);
        
        return true;
    }
}

// Mitigation strategies for flash loan attacks

// 1. Use Time-Weighted Average Prices (TWAP)
contract SecurePriceOracle {
    struct Observation {
        uint timestamp;
        uint price;
    }
    
    Observation[] public observations;
    uint public period = 30 minutes;
    
    function update() external {
        // Add current price to observations
        observations.push(Observation({
            timestamp: block.timestamp,
            price: getCurrentPrice()
        }));
    }
    
    function consult() external view returns (uint) {
        uint length = observations.length;
        require(length > 0, "No observations");
        
        // Calculate TWAP over the period
        uint timeWeightedPrice = 0;
        uint totalTime = 0;
        
        for (uint i = length - 1; i > 0; i--) {
            Observation memory current = observations[i];
            Observation memory previous = observations[i-1];
            
            if (previous.timestamp < block.timestamp - period) {
                break;
            }
            
            uint timeElapsed = current.timestamp - previous.timestamp;
            totalTime += timeElapsed;
            timeWeightedPrice += previous.price * timeElapsed;
        }
        
        return timeWeightedPrice / totalTime;
    }
    
    function getCurrentPrice() internal view returns (uint) {
        // Implementation depends on the specific price source
    }
}

// 2. Implement circuit breakers
contract CircuitBreaker {
    bool public paused;
    uint public lastPrice;
    uint public priceChangeThreshold = 5; // 5% threshold
    
    function executeTransaction() external {
        require(!paused, "System is paused");
        
        uint currentPrice = getCurrentPrice();
        
        // Check for suspicious price movements
        if (lastPrice > 0) {
            uint priceChange = calculatePercentageChange(lastPrice, currentPrice);
            if (priceChange > priceChangeThreshold) {
                paused = true;
                emit CircuitBroken(lastPrice, currentPrice, priceChange);
                return;
            }
        }
        
        lastPrice = currentPrice;
        
        // Execute transaction logic
    }
    
    function calculatePercentageChange(uint oldPrice, uint newPrice) internal pure returns (uint) {
        if (oldPrice == 0) return 0;
        
        uint change;
        if (newPrice > oldPrice) {
            change = ((newPrice - oldPrice) * 100) / oldPrice;
        } else {
            change = ((oldPrice - newPrice) * 100) / oldPrice;
        }
        
        return change;
    }
    
    function getCurrentPrice() internal view returns (uint) {
        // Implementation depends on the specific price source
    }
    
    event CircuitBroken(uint oldPrice, uint newPrice, uint percentageChange);
}