From 9b66e69ca4229cd54c86a1cafa0835917658e482 Mon Sep 17 00:00:00 2001 From: Daniel Wang <99078276+dantaik@users.noreply.github.com> Date: Thu, 4 Apr 2024 23:36:12 +0800 Subject: [PATCH] docs(protocol): add code4rena analysis (#16649) --- .../docs/analysis/MrPotatoMagic-Analysis.md | 156 +++ .../protocol/docs/analysis/Myd-Analysis.md | 505 ++++++++++ .../docs/analysis/Sathish9098-Analysis.md | 894 ++++++++++++++++++ .../docs/analysis/kaveyjoe-Analysis.md | 778 +++++++++++++++ 4 files changed, 2333 insertions(+) create mode 100644 packages/protocol/docs/analysis/MrPotatoMagic-Analysis.md create mode 100644 packages/protocol/docs/analysis/Myd-Analysis.md create mode 100644 packages/protocol/docs/analysis/Sathish9098-Analysis.md create mode 100644 packages/protocol/docs/analysis/kaveyjoe-Analysis.md diff --git a/packages/protocol/docs/analysis/MrPotatoMagic-Analysis.md b/packages/protocol/docs/analysis/MrPotatoMagic-Analysis.md new file mode 100644 index 00000000000..e9138690c4c --- /dev/null +++ b/packages/protocol/docs/analysis/MrPotatoMagic-Analysis.md @@ -0,0 +1,156 @@ +# Analysis Report + +## Approach taken in evaluating the codebase + +### Time spent on this audit: 21 days (Full duration of the contest) + +Day 1 + +- Consuming resources provide in the README +- Understanding and noting down the logical scope + +Day 2-7 + +- Reviewing base contracts (least inherited) +- Adding inline bookmarks for notes +- Understanding RLP encoding, EIP-4844, + +Day 8-12 + +- Reviewing core libs such as LibDepositing, Proposing, Verifying, Proving +- Adding inline bookmarks for problems in libs +- Gas optimizations for libs + +Day 13-14 + +- Other L1, L2 contracts for taiko + +Day 15-19 + +- Reviewing bridge contracts, timelocktokenpool, airdrop contracts + +Day 19-21 + +- Writing reports + +## Architecture recommendations + +### What's unique? + +1. Allowing custom processing - Allowing users to take over the processing aspect gives them control over how and when they want to process their messages. +2. On L2s and L2s that have no invocation delays, the team has created an MEV market from the bridge itself since the processing fees are rewarded to the fastest processor. +3. Use to transient storage - The team has used TSTORE and TLOAD in two places. One is to enable cheaper reentrancy locks and the second is to provide external applications with context. Having context is important since it allows anyone e.g. the vaults to verify whether the source sending the transactions is valid. + +### What's using existing patterns and how this codebase compare to others I'm familiar with + +- Comparing Taiko to Starknet, the taiko model is much superior since it takes Ethereum's security and uses it to provide cheaper fees to user. The risk associated with Taiko is lesser as well even though it is a type-1 zkevm. This is because Taiko uses guardians while Starknet implements escape hatches, which are more centralized. + +## Centralization risks + +### Actors Involved and their roles + +1. The biggest trust assumption in the contract is the owner role handling all the Address manager contracts. This role can pause the contracts at anytime. +2. The second trust assumption is the guardians multisig. Currently, the guardians are trusted and will be removed over time. But since they are the highest tier, the centralization risk in the proving system exists. +3. ANother role is the bridge watchdog. This role can ban and suspend any messages at will. It is the most important risk of the bridge contracts. +4. The snapshooter role has some risks associated since it takes snapshots on the TaikoToken. + +There are more roles in the codebase but these are the foremost and most central to the protocol. + +## Resources used to gain deeper context on the codebase + +1. Based Rollups and decentralized sequencing + +- [Understanding the Concept of Based Rollups](https://ethresear.ch/t/based-rollups-superpowers-from-l1-sequencing/15016) +- [Based Rollup FAQ](https://taiko.mirror.xyz/7dfMydX1FqEx9_sOvhRt3V8hJksKSIWjzhCVu7FyMZU) +- [X space - Part 1](https://www.youtube.com/watch?v=eS5s08sgjuo) +- [X space - Part 2](https://www.youtube.com/watch?v=RqgIEkAfpks) + +2. Based Contestable Rollup (BCR) + +- [Understanding the concept of Based Contestable Rollup](https://taiko.mirror.xyz/Z4I5ZhreGkyfdaL5I9P0Rj0DNX4zaWFmcws-0CVMJ2A) +- [Based Contestable Rollup 101](https://www.youtube.com/watch?v=A6ncZirXPfc) + +3. Protocol Documentation + +- [Website Docs](https://docs.taiko.xyz/core-concepts/what-is-taiko/) +- [Markdown concept-specific docs](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/docs) + +## Mechanism Review + +### Protocol Goals + +![Imgur](https://i.imgur.com/eWUK7d5.png) + +### High Level System Overview + +![Imgur](https://i.imgur.com/C2NE56L.png) + +### Understanding Taiko BCR + +1. Taiko has no sequencer - block builders/sequencing is decided by Ethereum validators. Permissionless block proposing, building and proving of taiko blocks. Since it uses what Ethereum has to provide (the market of proposers/builders) to its advantage and is not reinventing the wheel, Taiko is "based". + +2. Why do we need contestable rollups? + +Although ZK is the future, it does introduce complexity in the implementation of the system and thus the chances of bugs. There might be a small % of proofs that are invalid but can still be verified onchain. As a protocol designer, Taiko has to handle these small odds. No validity proof can be trusted without battle testing in short. A malicious block proposer (since proposing blocks is permissionless) can bundle a lot of transactions in a block and create an invalid proof, which would not be handleable by the MerkleTrie verification system. This is why contestable rollups are introduced to prevent these kind of situations/attacks. + +Due to this since not all blocks are ZK-provable (block gas limit <> ZK constraint limit), Taiko introduced the guardian role to override invalid proofs. + +Another reason why this tier-based contestable rollup design is used is in case, app chains, other layer 2s and layer3s want to use different proof systems other than ZK (so opt out of ZK proofs and maybe opt into SGX proof a.k.a Optimistic proofs). + +3. How the guardian will be chosen + +DAO => Security Council (owner of all smart contracts) => security council is a multisig with a lot of actors not only from taiko but also the community (like token holders) => security council will decide who will be the guardians => guardian is the multisig smart contract onchain => each guardian will have to run their own full node => each guardian works independently and they do not need to reach consensus offchain => they independently correct the wrong onchain => if the aggregated approval onchain is greater than let's say 2/3rd of the guardians, then the previous proof is overwritten by the guardian to make sure the network is on the right path and has the right state. + +This guardian proving should be really rare since there is this taiko token-based bond design i.e. validity bond which will be burnt if the proof is re-proven to be incorrect or they have the contestation bond i.e. if you contest a proof and it ends up that the original proof is correct and you are wrong, then your contestation bond is burnt. + +This prevents people from spamming the network (unless they want to burn bonds, which is dumb). + +Eventually, after the best tier i.e. highest tier proof (ZK proof) is solid and battle-tested and is really bug free, then the guardian provers should be gone since it's really just for the training wheel. + +4. Benefits of Based Contestable Rollup + +- Abstraction of special if-else code into a tier-based proof system makes the developers aware that the team cannot just shut down the chain uasing guardian prover and does not have control over it. +- Taiko has 3 types of bonds - validity bonds, contestation bonds and liveness bonds. We've spoken about the first two. Liveness bonds are basically, le's say, I have a prover off-chain and this prover is supposed to submit the proof within 15 minutes, then if the prover does not submit the proof in that time, then the prover's liveness bond is burnt. +- As an app dev, you can always change your config a long way. You can just use one layer-1 transaction to go from 100% optimistic to 100% ZK rollup. +- As ZK becomes more trustworthy, the team will slowly increase the % to ZK until they become fully ZK and remove the guardian prover. + +5. Cooldown window for validity proofs + +Since we know ZK is not fully trustworthy, let's give it 2-3 hours, so that if nobody challenges this ZK proof, it is final. So from that perspective, Taiko always allows validity proofs to be challenged and overwritten with a higher-tier proof. This adds security. + +6. Another Benefit of Based Contestable Rollup + +If someone says "I don't like the contestable feature", they can always configure their rollup with only one (top) tier. Then all proofs are not contestable and final. No validity bond nor contestable bond applies. + +7. Taiko Mainnet Proofs + +Initially: Optimistic => SGX => PSE zkEVM => Guardians + +Later: Optimistic => SGX => PSE zkEVM => zkVM (risc0) => Guardians + +End game: multiple zkVMs (Guardians removed) + +### Chains supported + +- Ethereum +- Taiko L2s/L3s + +### Grouping of Core Contracts + +![Imgur](https://i.imgur.com/HMD27NM.png) + +### Recall specific scenario + +![Imgur](https://i.imgur.com/cHzS1vH.png) + +## Systemic Risks/Architecture-level weak spots and how they can be mitigated + +There are a few risks associated with the protocol: + +- The protocol does not have a robust on-chain fee estimation mechanism. On calling the on-chain functions, the relayers should provide the contracts with upto date prices for users or atleast maintain a default amount of gas to send across. +- The protocol would not work perfectly with swapping protocols. This is because the bridge includes invocation delays which can cause swaps to go outdated. +- There is an issue related to custom coinbase transfers which can create a risk among block proposers. + +### Time spent: + +200 hours diff --git a/packages/protocol/docs/analysis/Myd-Analysis.md b/packages/protocol/docs/analysis/Myd-Analysis.md new file mode 100644 index 00000000000..75ead667fcf --- /dev/null +++ b/packages/protocol/docs/analysis/Myd-Analysis.md @@ -0,0 +1,505 @@ +### Diagrams, admin/systemic/technical/integration risk discussions of the Taiko protocol. + +**Diagrams:** +To better understand the architecture and workflow of the Taiko protocol. + +1. System Overview Diagram: + +```mermaid +graph LR + A[Ethereum Mainnet] -- Block Verification --> B[Taiko L1 Contract] + B -- Block Proposal --> C[Taiko L2 Contract] + C -- Transaction Execution --> D[Taiko L2 Network] + B -- Asset Bridging --> E[Bridge Contract] + E -- Asset Management --> F[Vault Contracts] + B -- Cross-Chain Communication --> G[SignalService Contract] + D -- ZK-Proof Generation --> H[Verifier Nodes] + H -- Proof Submission --> B + I[Users] -- Interact With --> D + I -- Governance --> B +``` + +Overview of the main components and their interactions within the Taiko protocol. It illustrates the flow of block proposals, verification, and finalization between the Ethereum mainnet and the Taiko L2 network, as well as the role of the Bridge Contract, Vault Contracts, and SignalService Contract in facilitating asset transfers and cross-chain communication. + +2. Consensus and Block Verification Diagram: + +```mermaid +sequenceDiagram + participant User + participant L2_Network + participant L1_Contract + participant Verifier + + User ->> L2_Network: Submit Transaction + L2_Network ->> L1_Contract: Propose Block + L1_Contract ->> Verifier: Request Proof Generation + Verifier -->> L1_Contract: Submit ZK-Proof + L1_Contract ->> L1_Contract: Verify Proof + alt Proof Valid + L1_Contract ->> L2_Network: Finalize Block + else Proof Invalid + L1_Contract ->> L2_Network: Reject Block + end +``` + +The consensus and block verification process in the Taiko protocol. It shows the flow of transactions from users to the L2 network, the block proposal to the L1 contract, the generation and submission of ZK-proofs by verifiers, and the verification and finalization of blocks based on the validity of the proofs. + +**Admin/Systemic/Technical/Integration Risk Discussions:** + +1. Admin Risks: + + - Centralization of power: The Taiko protocol relies on certain admin roles, such as contract owners and protocol developers, who have privileged access and control over the system. There is a risk of centralization if these roles are not properly managed or if there is a concentration of power in a few individuals or entities. + - Governance risks: The governance mechanism in the Taiko protocol allows token holders to propose and vote on protocol upgrades and parameter changes. However, there are risks associated with the governance process, such as low voter participation, manipulation of voting power, or the passage of malicious proposals. + - Access control risks: Proper access control mechanisms must be in place to ensure that only authorized entities can perform critical operations, such as proposing blocks, verifying proofs, or managing bridge contracts. Inadequate access controls can lead to unauthorized actions and compromise the security of the system. + +2. **Systemic Risks:** + + - Economic incentives: The Taiko protocol relies on economic incentives to encourage participation and maintain the security of the network. However, misaligned incentives or unintended consequences in the token economics can lead to systemic risks, such as lack of participation, concentration of power, or market manipulation. + - Network effects: The success and adoption of the Taiko protocol depend on network effects and the growth of its ecosystem. Insufficient network effects or a lack of user and developer adoption can pose systemic risks to the long-term sustainability and viability of the protocol. + - Regulatory risks: The regulatory landscape for blockchain and Layer 2 solutions is still evolving. Changes in regulations or legal requirements can impact the operation and adoption of the Taiko protocol, creating systemic risks for the ecosystem. + +3. **Technical Risks:** + + - Smart contract vulnerabilities: The Taiko protocol heavily relies on smart contracts for its core functionalities. Any vulnerabilities or bugs in the contract code can lead to technical risks, such as fund loss, system malfunction, or exploitation by malicious actors. + - ZK-proof security: The security of the Taiko protocol depends on the robustness and reliability of the zero-knowledge proof system used for block verification. Any weaknesses or flaws in the ZK-proof implementation can compromise the integrity of the system and pose technical risks. + - Scalability and performance: The Taiko protocol aims to provide a scalable and efficient Layer 2 solution. However, there are technical risks associated with the scalability and performance of the system, such as network congestion, high gas costs, or limitations in transaction throughput. + +4. **Integration Risks:** + - Cross-chain communication: The Taiko protocol involves cross-chain communication and message passing between the Ethereum mainnet and the Taiko L2 network. Risks can arise from the integration and synchronization of state updates, bridge transfers, and other critical events across the two networks. + - Ecosystem integration: The Taiko protocol interacts with various external components, such as wallets, dApps, and other blockchain networks. Integration risks can occur due to compatibility issues, API changes, or dependencies on third-party services. + - Upgradability and migration: As the Taiko protocol evolves, there may be a need for upgrades, migrations, or changes to the system. Integration risks can arise during these processes, such as data loss, compatibility issues, or disruptions to the network. + +#### Explanation: + +The Taiko protocol is a complex system that involves multiple components, actors, and interactions. The architecture diagram provides a high-level overview of the main building blocks, including the Ethereum mainnet, Taiko L1 Contract, Taiko L2 Contract, Bridge Contract, Vault Contracts, SignalService Contract, and Verifier Nodes. + +The workflow of the Taiko protocol starts with users submitting transactions to the Taiko L2 network. These transactions are collected by block proposers, who compress them into proposed blocks and submit them to the Taiko L1 Contract on the Ethereum mainnet. Verifier nodes then generate ZK-proofs to attest to the validity of the proposed blocks and submit these proofs to the L1 contract for verification. + +If the proofs are valid, the L1 contract finalizes the block and updates the L2 state. The Taiko L2 Contract on the L2 network receives the updated state and continues processing transactions. If the proofs are invalid, the block is rejected, and the L2 network continues with the previous state. + +The Bridge Contract and Vault Contracts facilitate the transfer of assets between the Ethereum mainnet and the Taiko L2 network. Users can lock assets on the mainnet, and corresponding tokens are minted on the L2 network. Similarly, tokens can be burned on the L2 network, and the corresponding assets are unlocked on the mainnet. The SignalService Contract enables cross-chain communication and message passing between the two networks. + +The Taiko protocol also includes a governance mechanism that allows token holders to propose and vote on protocol upgrades and parameter changes. This governance process is executed through the Taiko L1 Contract and ensures the decentralized evolution and improvement of the protocol. + +However, the Taiko protocol is not without risks. Admin risks arise from the centralization of power and the need for proper access control and governance mechanisms. Systemic risks can occur due to misaligned incentives, insufficient network effects, or changes in the regulatory landscape. Technical risks are associated with smart contract vulnerabilities, ZK-proof security, and scalability challenges. Integration risks can arise from cross-chain communication, ecosystem integration, and upgradability processes. + +> To mitigate these risks, the Taiko protocol must implement robust security measures, conduct thorough audits and testing, and establish clear governance and access control policies. Continuous monitoring, upgrades, and community engagement are essential to address emerging risks and ensure the long-term success of the protocol. + +## 1. Architecture Overview + +The Taiko protocol consists of several key components that work together to enable a based rollup solution. The main contracts and their interactions are depicted in the following diagram: + +```mermaid +graph LR + A[TaikoL1] --> B[TaikoL2] + A --> C[TaikoToken] + A --> D[TaikoGovernor] + A --> E[TaikoTimelockController] + A --> F[AddressManager] + A --> G[SignalService] + A --> H[Bridge] + B --> F + B --> G + B --> H + H --> I[ERC20Vault] + H --> J[ERC721Vault] + H --> K[ERC1155Vault] +``` + +- **TaikoL1**: The main contract on the Ethereum network that manages block proposing, proving, and verification. +- **TaikoL2**: The contract pre-deployed on the Taiko L2 network that handles L2 block processing and anchoring to L1. +- **TaikoToken**: The native token of the Taiko protocol, used for staking and governance. +- **TaikoGovernor**: The governance contract that manages protocol upgrades and parameter changes. +- **TaikoTimelockController**: A timelock controller contract that enforces a delay on sensitive actions. +- **AddressManager**: A contract that manages the addresses of various protocol components. +- **SignalService**: A contract that facilitates cross-chain communication and message verification. +- **Bridge**: The main contract that handles asset bridging between Ethereum and Taiko L2. +- **ERC20Vault**, **ERC721Vault**, **ERC1155Vault**: Contracts that manage the storage and bridging of different token standards. + +## 4. Codebase Quality Analysis + +The Taiko codebase follows a modular and well-structured design, with contracts organized into relevant directories based on their functionality. The code is written in Solidity and adheres to common best practices and standards. + +### 4.1 Code Quality + +- The codebase maintains a consistent coding style and follows the Solidity naming conventions. +- Functions and variables are appropriately named, enhancing code readability and understandability. +- The use of libraries, such as `LibAddress`, `LibMath`, and `LibTrieProof`, promotes code reusability and modularity. +- The codebase includes comprehensive error handling, with custom error messages defined for various failure scenarios. +- The contracts make use of access control modifiers, such as `onlyOwner` and `onlyFromNamed`, to restrict access to critical functions. + +### 4.2 Documentation and Comments + +- The codebase includes natspec comments for most functions and contracts, providing a clear understanding of their purpose and behavior. +- Critical sections of the code are accompanied by inline comments explaining the logic and reasoning behind certain decisions. +- The repository includes a detailed README file that provides an overview of the Taiko protocol and guides developers on how to set up and interact with the contracts. + +### 4.3 Testing and Verification + +- The codebase includes a comprehensive test suite that covers various scenarios and edge cases. +- The use of the `hardhat` development environment and testing framework ensures a standardized and efficient testing process. +- The contracts undergo thorough unit testing, with each critical function and component being tested individually. +- Integration tests are conducted to verify the interaction between different contracts and components. + +## 5. Centralization Risks and Admin Control Abuse + +The Taiko protocol incorporates several mechanisms to mitigate centralization risks and prevent admin control abuse. However, there are a few areas that require careful consideration: + +### 5.1 Contract Ownership + +- Each contract in the Taiko protocol has an owner who possesses elevated privileges, such as the ability to upgrade the contract code and perform specific actions. +- While the ownership model allows for efficient contract management and upgrades, it introduces a level of centralization risk. +- Mitigation: Implement a multi-sig wallet or a decentralized governance mechanism for contract ownership to distribute control and reduce the risk of a single point of failure. + +### 5.2 Special Roles + +- The protocol defines special named roles, such as `proposer`, `proposer_one`, and `bridge_pauser`, which grant certain privileges to specific addresses. +- These roles can be configured to `address(0)` to disable the associated functions. +- Mitigation: Regularly review and audit the assignment of special roles to ensure they are assigned to trusted and accountable entities. Consider implementing time-limited or rotatable roles to reduce the impact of potential abuse. + +### 5.3 Governance + +- The `TaikoGovernor` contract manages protocol upgrades and parameter changes through a decentralized governance process. +- While decentralized governance reduces centralization risks, it is essential to ensure that the governance process is fair, transparent, and resistant to manipulation. +- Mitigation: Implement robust governance mechanisms, such as time-locks, multi-sig approvals, and community voting, to prevent unilateral control and ensure broad stakeholder participation. + +## 6. Mechanism Review + +### 6.1 Merkle Proof Verification + +The Merkle proof verification process is a critical component of the Taiko protocol, ensuring the integrity of state transitions and cross-chain communication. The `LibTrieProof` library handles the verification of Merkle proofs. + +- The `verifyMerkleProof` function takes the root hash, account address, slot, expected value, account proof, and storage proof as input. +- It verifies the account proof using the `SecureMerkleTrie.get` function from the `optimism/trie` library. +- If the account proof is valid, it extracts the storage root from the account state. +- It then verifies the storage proof using the `SecureMerkleTrie.verifyInclusionProof` function. +- The function returns the verified storage root. + +Potential Issues: + +- The security of the Merkle proof verification heavily relies on the correctness and security of the `optimism/trie` library. Any vulnerabilities in this library could compromise the verification process. +- The `verifyMerkleProof` function assumes that the provided proofs are correctly formatted and consistent with the expected data. Maliciously crafted proofs could potentially exploit edge cases and bypass the verification. + +Recommendations: + +- Regularly update and audit the `optimism/trie` library to ensure its security and correctness. +- Implement additional input validation checks to ensure the consistency and validity of the provided proofs. +- Consider implementing additional checks and error handling to cover edge cases and prevent potential exploits. + +### 6.2 Multi-Hop Bridging + +The Taiko protocol supports multi-hop bridging, allowing assets to be transferred across multiple chains. The `SignalService` contract plays a crucial role in this process. + +- The `proveSignalReceived` function verifies the inclusion of a signal in the source chain's state during the multi-hop bridging process. +- It iterates over the provided `HopProof` array, verifying each hop using the `_verifyHopProof` function. +- The function checks the validity of the hops by ensuring that the last hop's chain ID matches the current chain ID and that the intermediate hops' chain IDs are not zero and do not match the current chain ID. + +Potential Issues: + +- The current implementation does not explicitly prevent self-referential hops, where a hop's chain ID matches one of the previous hops' chain IDs. This could potentially lead to unexpected behavior or loss of funds if a malicious user constructs a proof with self-referential hops that bypass the loop detection. +- The security of the multi-hop bridging process relies on the correctness and security of the underlying bridge contracts and the `SignalService` contract. Any vulnerabilities in these components could compromise the entire bridging process. + +Recommendations: + +- Implement explicit checks to detect and prevent self-referential hops in the `proveSignalReceived` function. This can be done by maintaining a mapping or array of visited chain IDs and ensuring that each hop's chain ID is unique. +- Conduct thorough security audits of the bridge contracts and the `SignalService` contract to identify and address any potential vulnerabilities. +- Implement comprehensive error handling and input validation to cover edge cases and prevent potential exploits. + +### 6.3 Bridge Message Hashing + +The `Bridge` contract includes a `hashMessage` function that generates a hash of a bridge message using the `keccak256` hash function. + +- The `hashMessage` function takes an `IBridge.Message` struct as input, which contains various fields such as the message ID, source and destination chain IDs, owners, recipient, value, fee, gas limit, data, and memo. +- It encodes the `IBridge.Message` struct using `abi.encode` and then hashes the encoded message using `keccak256`. +- The resulting hash is returned. + +Potential Issues: + +- The security of the bridge message hashing relies on the collision resistance of the `keccak256` hash function. While `keccak256` is considered secure and widely used, it is important to stay updated with any new cryptographic advancements or potential weaknesses discovered in the future. +- The `IBridge.Message` struct includes various fields that collectively contribute to the uniqueness of the message hash. Any changes to the struct or the inclusion of additional fields could potentially impact the collision resistance of the hashing scheme. + +Recommendations: + +- Regularly review and assess the security of the `keccak256` hash function and stay informed about any new cryptographic advancements or potential weaknesses. +- Carefully manage any changes to the `IBridge.Message` struct and assess the impact on the hashing scheme. Ensure that any modifications maintain the uniqueness and collision resistance of the message hashes. +- Consider implementing additional checks and validations on the input fields of the `IBridge.Message` struct to prevent any potential manipulation or inconsistencies. + +### 6.4 Proof Contestation + +The Taiko protocol allows for the contestation of proofs to ensure the validity of state transitions. The proof contestation mechanism is implemented in the `LibProving` library. + +- The `proveBlock` function handles the proof submission and contestation process. +- If a submitted proof is contested, the function checks if the proof's tier matches the previous transition's tier and if the contest bond is non-zero. +- If the conditions are met, the function allows the proof to be contested by calling the `_checkProverPermission` function, which verifies if the caller is allowed to contest the proof based on the proving window and the assigned prover. +- If a proof is successfully contested, the transition state is updated, the contest bond is transferred from the contester to the contract, and a `TransitionContested` event is emitted. + +Potential Issues: + +- The current implementation relies on the `provingWindow` parameter to limit the time for contestations. If this parameter is not set appropriately, it could allow for prolonged delays in block confirmation. +- The protocol may lack sufficient measures to prevent repeated contestations by the same contester or group of contesters, potentially leading to delays and inefficiencies. +- The incentive structure for contestations may not be adequately balanced, allowing for frivolous contestations or discouraging legitimate challenges. + +Recommendations: + +- Carefully review and adjust the `provingWindow` parameter to ensure it provides an appropriate balance between allowing sufficient time for legitimate contestations and preventing prolonged delays. +- Implement additional measures to prevent repeated contestations, such as introducing a cooldown period or increasing the contest bond for repeated contestations by the same contester or group. +- Regularly assess and fine-tune the incentive structure for contestations to maintain a healthy balance between encouraging legitimate challenges and discouraging frivolous contestations. +- Conduct thorough testing and simulation of various contestation scenarios to identify and address any potential vulnerabilities or gaming opportunities. + +### 6.5 Block Proposing Ring Buffer + +The Taiko protocol utilizes a block proposing ring buffer to manage the block proposal process. The ring buffer is implemented in the `TaikoL1` contract. + +- The `proposeBlock` function is responsible for proposing new blocks and adding them to the ring buffer. +- The ring buffer has a fixed size determined by the `config.blockRingBufferSize` parameter. +- Blocks are added to the ring buffer using the `proposeBlock` function, which appends the proposed block to the buffer and increments the `state.slotB.numBlocks` counter. +- The ring buffer allows for a maximum of `config.blockMaxProposals` blocks to be proposed ahead of the last verified block. + +Potential Issues: + +- If an attacker can propose blocks faster than they can be verified and processed, they could potentially fill up the ring buffer and halt the chain. +- The attacker would need to have sufficient resources and network power to propose blocks at a high rate consistently. +- The vulnerability arises if the block verification and processing rate cannot keep up with the block proposal rate, leading to an accumulation of unverified blocks in the ring buffer. + +Recommendations: + +- Implement rate limiting mechanisms to prevent an attacker from proposing blocks at an excessively high rate. This can include dynamic adjustments based on network conditions or time-based restrictions on block proposals. +- Ensure that the `config.blockMaxProposals` parameter is set appropriately based on the expected network throughput and verification capacity. This parameter should strike a balance between allowing sufficient block proposals and preventing an attacker from overwhelming the system. +- Regularly monitor the block proposal and verification rates to identify any abnormal behavior or potential attacks. Implement monitoring and alerting systems to detect and respond to such situations promptly. +- Consider implementing additional safeguards, such as prioritizing the verification of blocks based on certain criteria (e.g., block proposer reputation) to mitigate the impact of potential attacks. + +### 6.6 L2 Anchor Transactions + +L2 anchor transactions play a crucial role in maintaining the integrity and security of the Taiko L2 chain. The `TaikoL2` contract includes the `anchor` function, which handles the anchoring of L1 block details to L2. + +- The `anchor` function is responsible for verifying and storing the L1 block details, including the block hash, state root, block ID, and parent gas used. +- It performs various checks, such as validating the input parameters, verifying the sender's permission, and checking the ancestor hashes. +- The function calculates the base fee for the L2 block using the `_calc1559BaseFee` function and compares it with the current block's base fee. If there is a mismatch and the fee check is not skipped, the function reverts. +- If the provided L1 block ID is greater than the last synced block by a certain threshold, the function syncs the L1 state root with the signal service. +- The function updates the `l2Hashes` mapping, stores the parent block hash, and updates the `publicInputHash`. + +Potential Issues: + +- The security of the anchoring process relies on the correctness and integrity of the provided L1 block details. If an attacker can manipulate or provide invalid L1 block details, it could compromise the integrity of the L2 chain. +- The `anchor` function performs various checks and validations, but there may be edge cases or scenarios that are not fully covered, potentially leading to inconsistencies or vulnerabilities. +- The function interacts with the signal service to sync the L1 state root. Any vulnerabilities or issues in + +## Conceptual Overview of the Taiko Protocol + +Taiko is a decentralized, Ethereum-compatible rollup protocol that aims to provide scalability and faster transaction processing while maintaining the security and decentralization of the Ethereum network. It utilizes a unique "based" rollup approach, which means it is inspired by, secured by, and sequenced by Ethereum. + +The Taiko Protocol leverages zero-knowledge proofs (ZK-proofs) to validate and compress transactions, reducing the amount of data stored on the Ethereum mainnet. This allows for higher transaction throughput and lower gas fees compared to directly executing transactions on Ethereum. + +## System Overview + +The Taiko Protocol consists of several key components that work together to enable efficient and secure transaction processing: + +1. **Taiko L1 Contract**: The main contract deployed on the Ethereum mainnet that manages block proposing, proving, and verification. It interacts with other components of the Taiko Protocol. + +2. **Taiko L2 Contract**: The contract deployed on the Taiko L2 network that handles L2 block processing and anchoring to the Ethereum mainnet. + +3. **Taiko Token**: The native token of the Taiko Protocol used for staking, governance, and incentivizing participants. + +4. **Bridge**: A smart contract that facilitates the transfer of assets between the Ethereum mainnet and the Taiko L2 network. + +5. **Vaults**: Contracts responsible for managing the storage and bridging of different token standards (ERC20, ERC721, ERC1155) between the Ethereum mainnet and the Taiko L2 network. + +6. **SignalService**: A contract that enables cross-chain communication and message verification between the Ethereum mainnet and the Taiko L2 network. + +7. **Verifiers**: Off-chain actors who generate ZK-proofs to validate the correctness of state transitions and transactions on the Taiko L2 network. + +## Breakdown of Functions + +The Taiko Protocol implements several key functions to ensure secure and efficient transaction processing: + +1. **Block Proposing**: Block proposers submit new L2 blocks to the Taiko L1 Contract, which includes the compressed transactions and state transitions. + +2. **Block Proving**: Verifiers generate ZK-proofs to validate the correctness of the proposed blocks and submit them to the Taiko L1 Contract. + +3. **Block Verification**: The Taiko L1 Contract verifies the submitted ZK-proofs and finalizes the L2 blocks, updating the state on the Ethereum mainnet. + +4. **Asset Bridging**: Users can transfer assets between the Ethereum mainnet and the Taiko L2 network using the Bridge contract and the associated Vault contracts. + +5. **Cross-Chain Communication**: The SignalService contract facilitates the verification and relay of messages between the Ethereum mainnet and the Taiko L2 network. + +6. **Governance**: The Taiko Protocol includes governance mechanisms that allow token holders to propose and vote on protocol upgrades and parameter changes. + +## Roles in the System + +The Taiko Protocol involves various roles and participants: + +1. **Block Proposers**: Entities responsible for proposing new L2 blocks to the Taiko L1 Contract. + +2. **Verifiers**: Off-chain actors who generate ZK-proofs to validate the correctness of proposed blocks and state transitions. + +3. **Stakers**: Token holders who stake their Taiko tokens to participate in the protocol's security and governance. + +4. **Users**: Individuals or applications that interact with the Taiko L2 network, executing transactions and utilizing its scalability benefits. + +5. **Governance Participants**: Token holders who participate in the governance process by proposing and voting on protocol upgrades and changes. + +## Architecture and Workflow + +The Taiko Protocol follows a specific workflow to process transactions and ensure the security and integrity of the system: + +1. **L2 Transaction Execution**: Users submit transactions to the Taiko L2 network, where they are executed and included in L2 blocks. + +2. **Block Proposing**: Block proposers compress the L2 transactions and state transitions into a proposed block and submit it to the Taiko L1 Contract on the Ethereum mainnet. + +3. **Proof Generation**: Verifiers generate ZK-proofs off-chain to validate the correctness of the proposed block and state transitions. + +4. **Proof Submission**: Verifiers submit the generated ZK-proofs to the Taiko L1 Contract for verification. + +5. **Block Verification**: The Taiko L1 Contract verifies the submitted ZK-proofs and finalizes the L2 block, updating the state on the Ethereum mainnet. + +6. **Asset Bridging**: Users can transfer assets between the Ethereum mainnet and the Taiko L2 network using the Bridge contract and the associated Vault contracts. The Bridge contract handles the locking and unlocking of assets, while the Vault contracts manage the storage and minting/burning of tokens on the respective networks. + +7. **Cross-Chain Communication**: The SignalService contract facilitates the verification and relay of messages between the Ethereum mainnet and the Taiko L2 network, enabling seamless communication and interoperability. + +8. **Governance**: Token holders can participate in the governance process by proposing and voting on protocol upgrades and parameter changes. The governance mechanism ensures the decentralized evolution and improvement of the Taiko Protocol. + +This architectural design and workflow enable the Taiko Protocol to provide a scalable and efficient Layer 2 solution while leveraging the security and decentralization of the Ethereum network. + +Risk Assessment: + +--- + +The Taiko Protocol, being a complex system, inherently involves certain risks that need to be carefully considered and mitigated. + +1. **Smart Contract Vulnerabilities**: As with any smart contract-based system, the Taiko Protocol is susceptible to potential vulnerabilities in its contract code. Any bugs or exploits in the contract logic could lead to financial losses, system disruption, or compromise of user funds. + + Mitigation: Thorough security audits, code reviews, and testing should be conducted to identify and address any vulnerabilities in the smart contract code. Adopting best practices in contract development, such as using well-tested libraries and following secure coding guidelines, can help minimize the risk of vulnerabilities. + +2. **Consensus and Block Verification**: The Taiko Protocol relies on a proof-based consensus mechanism, where verifiers generate ZK-proofs to validate the correctness of proposed blocks. If there are any flaws or weaknesses in the consensus algorithm or the ZK-proof generation process, it could potentially lead to invalid blocks being accepted or valid blocks being rejected. + + Mitigation: Rigorous testing and formal verification of the consensus algorithm and ZK-proof generation process should be performed to ensure their correctness and resilience against potential attacks. Continuously monitoring the network for any abnormalities or suspicious activities can help detect and mitigate any issues promptly. + +3. **Bridge Security**: The Taiko Protocol involves asset bridging between the Ethereum mainnet and the Taiko L2 network. The security of the Bridge contract and the associated Vault contracts is crucial to prevent unauthorized access, theft, or loss of bridged assets. + + Mitigation: Implementing robust access controls, multi-sig mechanisms, and thorough testing of the Bridge and Vault contracts can help ensure the security of bridged assets. Regular security audits and monitoring of the bridging process can help identify and address any potential vulnerabilities or suspicious activities. + +4. **Governance Risks**: The Taiko Protocol incorporates a governance mechanism that allows token holders to propose and vote on protocol upgrades and changes. However, governance processes can be subject to various risks, such as low voter participation, centralization of voting power, or malicious proposals. + + Mitigation: Designing a fair and inclusive governance model that encourages active participation from a diverse range of stakeholders can help mitigate governance risks. Implementing safeguards, such as proposal thresholds, time-locks, and multi-sig requirements, can prevent malicious or hastily made changes to the protocol. + +5. **Operational Risks**: The Taiko Protocol relies on the proper functioning and coordination of various components, including block proposers, verifiers, and the underlying infrastructure. Operational failures, such as network disruptions, node failures, or human errors, can impact the system's performance and reliability. + + **Mitigation**: Implementing robust monitoring and alerting systems, as well as having well-defined incident response procedures, can help quickly detect and resolve operational issues. Regular testing, failover mechanisms, and redundancy measures can enhance the system's resilience against operational risks. + +**Architecture Overview Diagram:** + +```mermaid +graph TD + A[Ethereum Mainnet] -- Block Proposing --> B[Taiko L1 Contract] + B -- Block Verification --> A + B -- Asset Bridging --> C[Bridge Contract] + C -- Token Management --> D[Vault Contracts] + B -- Cross-Chain Communication --> E[SignalService] + F[Taiko L2 Network] -- L2 Transactions --> G[Taiko L2 Contract] + G -- Block Proving --> B + G -- Asset Bridging --> C + H[Verifiers] -- ZK-Proofs --> B + I[Users] -- Interact With --> F + J[Governance] -- Proposals & Voting --> B +``` + +System Overview Diagram: + +```mermaid +graph LR + A[Users] -- Submit Transactions --> B[Taiko L2 Network] + B -- Propose Blocks --> C[Taiko L1 Contract] + D[Verifiers] -- Generate ZK-Proofs --> C + C -- Verify Blocks --> E[Ethereum Mainnet] + A -- Bridge Assets --> F[Bridge Contract] + F -- Lock/Unlock Assets --> G[Vault Contracts] + C -- Relay Messages --> H[SignalService] + I[Governance Participants] -- Propose/Vote --> C +``` + +Admin Flow Diagram: + +```mermaid +graph LR + A[Admin] -- Deploy/Upgrade --> B[Taiko L1 Contract] + A -- Set Parameters --> B + A -- Manage Roles --> B + B -- Control --> C[Taiko L2 Contract] + B -- Control --> D[Bridge Contract] + B -- Control --> E[Vault Contracts] + B -- Control --> F[SignalService] + A -- Emergency Stop --> B +``` + +Breakdown of Functions Diagram: + +```mermaid +graph TD + A[Taiko Protocol] --> B[Block Proposing] + A --> C[Block Proving] + A --> D[Block Verification] + A --> E[Asset Bridging] + A --> F[Cross-Chain Communication] + A --> G[Governance] + B --> H[Propose L2 Blocks] + C --> I[Generate ZK-Proofs] + D --> J[Verify ZK-Proofs] + D --> K[Finalize L2 Blocks] + E --> L[Lock/Unlock Assets] + E --> M[Mint/Burn Tokens] + F --> N[Verify Messages] + F --> O[Relay Messages] + G --> P[Propose Upgrades] + G --> Q[Vote on Proposals] +``` + +Architecture and Workflow Diagram: + +```mermaid +sequenceDiagram + participant User + participant TaikoL2Network + participant TaikoL1Contract + participant Verifier + participant EthereumMainnet + participant BridgeContract + participant VaultContract + participant SignalService + + User->>TaikoL2Network: Submit L2 Transaction + TaikoL2Network->>TaikoL1Contract: Propose L2 Block + Verifier->>TaikoL1Contract: Submit ZK-Proof + TaikoL1Contract->>EthereumMainnet: Verify and Finalize Block + User->>BridgeContract: Bridge Assets + BridgeContract->>VaultContract: Lock/Unlock Assets + TaikoL1Contract->>SignalService: Relay Messages + SignalService->>TaikoL2Network: Verify and Process Messages +``` + +Roles in the System Diagram: + +```mermaid +graph LR + A[Block Proposers] -- Propose L2 Blocks --> B[Taiko L1 Contract] + C[Verifiers] -- Generate ZK-Proofs --> B + D[Stakers] -- Stake Tokens --> B + E[Users] -- Interact With --> F[Taiko L2 Network] + G[Governance Participants] -- Propose/Vote --> B +``` + +**Contract Markdown Table:** + +| Contract Name | Description | Risk Considerations | +| -------------------- | -------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | +| Taiko L1 Contract | Manages block proposing, proving, and verification on the Ethereum mainnet | Smart contract vulnerabilities, consensus and block verification risks | +| Taiko L2 Contract | Handles L2 block processing and anchoring to the Ethereum mainnet | Smart contract vulnerabilities, operational risks | +| Bridge Contract | Facilitates asset bridging between the Ethereum mainnet and the Taiko L2 network | Bridge security risks, smart contract vulnerabilities | +| Vault Contracts | Manage the storage and bridging of different token standards | Smart contract vulnerabilities, asset management risks | +| SignalService | Enables cross-chain communication and message verification | Smart contract vulnerabilities, message relay risks | +| Governance Contracts | Implement governance mechanisms for protocol upgrades and parameter changes | Governance risks, centralization risks | + +This table provides an overview of the key contracts in the Taiko Protocol, along with their descriptions and the associated risk considerations. It's crucial to thoroughly audit and test these contracts to identify and mitigate any potential vulnerabilities or risks. + +### Time spent: + +25 hours diff --git a/packages/protocol/docs/analysis/Sathish9098-Analysis.md b/packages/protocol/docs/analysis/Sathish9098-Analysis.md new file mode 100644 index 00000000000..fcbb419bdd0 --- /dev/null +++ b/packages/protocol/docs/analysis/Sathish9098-Analysis.md @@ -0,0 +1,894 @@ +# Taiko Analysis + +## Technical Overview + +The Taiko Protocol is an advanced layer-2 scaling solution designed for the `Ethereum blockchain`, aiming to improve transaction efficiency, reduce costs, and enhance scalability. Key components include `LibVerifying` for secure block validation, `Lib1559Math` for dynamic fee adjustments, and `TaikoL2`, which facilitates cross-layer communication and gas pricing. The protocol also introduces Bridged Tokens (`BridgedERC20`, `BridgedERC721`, `BridgedERC1155`) to seamlessly transfer assets between chains while maintaining their integrity. Additionally, the BaseVault contracts (`ERC20Vault`, `ERC721Vault`, `ERC1155Vault`) securely manage token deposits, withdrawals, and bridging. Overall, Taiko stands out for its robust security measures, innovative economic model, and ability to provide seamless cross-chain interactions within the DeFi ecosystem. + +## System Overview and Risk Analysis + +## Scope + +Conducted a detailed technical analysis of contracts designated with a `HIGH` priority according to the scope document, focusing on their critical roles within the system architecture and potential security risks. + +## EssentialContract.sol + +This contract inherits from `OpenZeppelin's UUPS` (Universal Upgradeable Proxy Standard) and `Ownable2StepUpgradeable` contracts, indicating it is part of a system designed for upgradeability and ownership management. Additionally, it integrates an `AddressResolver` for dependency management. + +### Here's a breakdown of the key functions + +- `pause()`: Enforces contract `pausing`, emitting Paused event, with whenNotPaused guard. + +- `unpause()`: Lifts contract `pause state`, emitting Unpaused event, with whenPaused guard. + +- `paused()`: Returns contract's paused status as a boolean from internal `__paused`. + +- `__Essential_init(address _owner, address _addressManager)`: Initializes contract's owner and integrates address manager, checks non-zero address manager. + +- `__Essential_init(address _owner)`: Sets initial contract owner, defaulting to message sender if zero address. + +- `_authorizeUpgrade(address)`: Enforces owner-only access for contract upgrades in UUPS pattern. + +- `_authorizePause(address)`: Restricts `pause/unpause` actions to contract owner only. + +- `_storeReentryLock(uint8 _reentry)` : Manages `reentrancy lock` status, adapting for network-specific storage mechanisms. + +- `_loadReentryLock()` : Retrieves and returns the state of the reentrancy lock. + +- `_inNonReentrant()` : Provides boolean status of contract's reentrancy lock for current operation context. + +## Roles + +### Contract Owner: + +- Central role, typically involved in critical functionalities like contract upgrades, pausing, and unpausing the contract. + +- Has exclusive rights to authorize upgrades (via \_authorizeUpgrade function) and change the `contract's paused state` (`pause` and `unpause` functions). + +- Involved in the initial setting or transferring of ownership through the `__Essential_init` functions and the `ownership transfer` mechanisms inherited from `Ownable2StepUpgradeable`. + +### Named Addresses (via `onlyFromOwnerOrNamed`) + +- Secondary role defined by specific names resolved through the AddressResolver, used in the `onlyFromOwnerOrNamed` modifier. + +- Allows specific functions to be executed not just by the contract owner but also by addresses that are resolved (and thus authorized) through the contract's address resolution system. + +## Risks + +### Systemic risks + +#### Network Dependency + +By varying behavior with `chainid`, the contract could perform differently on various `Ethereum networks` (`mainnet` vs. `testnets` or `layer-2 networks`). This divergence can lead to a lack of uniformity in how reentrancy protection behaves, making it difficult to ensure the same level of security across environments. + +### Technical Risks + +#### Reentrancy Guard Implementation + +While intended to prevent reentrant attacks, the custom implementation based on `chain ID` could harbor unseen vulnerabilities, especially under different network conditions or unexpected interactions. + +### Integration Risks + +#### Address Resolver Dependence + +The system's reliance on the `AddressResolver` for identifying `roles` and `permissions` could lead to integration issues if the resolver contains `incorrect addresses` or `becomes compromised`. + +### Admin Abuse Risks + +#### Upgradeable Proxy Pattern Risks + +Utilizing the `UUPS upgradeable` framework, the contract grants the owner unilateral authority to deploy new logic. This can centralize power, enabling the owner to modify contract behaviors or insert vulnerabilities without external validation or consensus, potentially compromising transparency and user trust. + +#### Sole Authority Over Reentrancy Lock + +The contract's `reentrancy lock` varies with the network (`mainnet` vs. `others`), managed solely by the `administrator`. This can create unequal security postures across different environments, leading to potential inconsistencies in threat mitigation and favoritism in network-specific defenses, undermining homogeneous security standards. + +## LibTrieProof.sol + +The `LibTrieProof` library in Solidity is designed for verifying `Merkle proofs` against the Ethereum state or account storage. This is particularly relevant for systems interacting with Ethereum's state trie, where verifiability of on-chain data without direct access is necessary. + +- `verifyMerkleProof()` : It confirms whether a specific storage slot value (`_value`) of an Ethereum account (`_addr`) matches what's recorded on the blockchain, based on a provided state or storage root (`_rootHash`). + +- If an account proof (`_accountProof`) is provided, the function first checks whether this proof correctly leads from the state root (`_rootHash`) to the specified account. It verifies the account's existence and extracts the account's storage root. + +- Using the obtained or directly provided storage root, it then validates the storage proof (`_storageProof`) to ensure the given value (`_value`) is indeed at the specified storage slot (`_slot`). + +### Scenarios where this function `verifyMerkleProof()` might yield false or incorrect information + +- `State Root Mismatch` : If the provided state root does not match the actual root of the data being proven (due to a fork, update, or error), the function will fail to correctly verify the proof against this incorrect root. + +- `Chain Reorganizations` : On blockchains, especially Ethereum, chain reorganizations can change the state root unexpectedly. If a proof was generated just before a reorganization, it might become invalid shortly afterward. + +- `Incorrect Assumptions` : If the function makes incorrect assumptions about input formats, trie structure, or Ethereum state conventions, it might misinterpret valid proofs or validate invalid ones. + +### Systemic Risks + +### Potential to Replay Attacks + +In the `LibTrieProof` implementations, a `replay attack` can occur when an adversary reuses valid Merkle proofs from past transactions or states to perform unauthorized actions or validate `incorrect states` as `current`. This can lead to the system accepting `outdated` or `incorrect information` as valid, causing various security issues. + +#### How Replay Attacks Can Occur: + +- `Outdated State Proofs`: An actor could use a Merkle proof from an old state that is no longer accurate. For example, if a user had a large balance at a previous point in time but then spent most of it, they could try to use the old proof to claim they still have a large balance. + +- `Cross-Context Misuse` : A valid proof from one context (e.g., a transaction proving fund ownership in one contract) is used in another context where it should not be valid, exploiting the system's inability to distinguish between the original and intended use cases. + +#### Security Considerations and Mitigations + +1. `Timestamp or Block Height Validation` : Implementations should include the verification of timestamps or block heights within the proof to ensure they reflect the most recent state, preventing the use of outdated proofs. + +2. `Unique Identifiers and Nonces` : Use unique identifiers or nonces associated with each proof or transaction, ensuring a proof cannot be validly submitted more than once. + +3. `Contextual Verification` : Ensure that proofs are checked not only for their cryptographic validity but also for their relevance and appropriateness in the current context. + +4. `Proof Expiry` : Implement an expiry mechanism for proofs so that they are considered valid only for a certain period or up to a certain block height after their generation. + +### Technical Risks + +`Resource Limitations` : Intensive computational requirements for proof verification might lead to out-of-gas errors or make the function prohibitively expensive to use, particularly during network congestion. + +## LibDepositing.sol + +The `LibDepositing` library in the Taiko protocol is designed to manage `Ether deposits`, specifically facilitating the transfer of `ETH` to a `Layer 2 solution`. + +### Key Functions + +1. `function depositEtherToL2(TaikoData.State storage _state, TaikoData.Config memory _config, IAddressResolver _resolver, address _recipient) internal` + +This function handles the deposit of `Ether` from `Layer 1` to `Layer 2`. It verifies the deposit amount is within set limits, sends the `ETH` to a `bridge address`, logs the deposit, and updates the `state` to reflect the new deposit. + +2. `function processDeposits(TaikoData.State storage _state, TaikoData.Config memory _config, address _feeRecipient) internal returns (TaikoData.EthDeposit[] memory deposits_)` + +Processes a batch of `ETH deposits` based on current protocol settings and the number of pending deposits. It applies processing fees, updates the state for each processed deposit, and ensures the fee for processing is allocated correctly. + +3. `function canDepositEthToL2(TaikoData.State storage _state, TaikoData.Config memory _config, uint256 _amount) internal view returns (bool)` + +Determines whether a new `ETH deposit` is permissible based on the protocol's current state and configuration, such as checking if the amount falls within the allowed range and ensuring there's room in the deposit queue. + +4. `function _encodeEthDeposit(address _addr, uint256 _amount) private pure returns (uint256)` + +Encodes the `recipient's` address and the deposit amount into a single `uint256` for efficient storage and handling within the smart contract, ensuring the amount does not exceed predefined limits. + +### Roles + +### Bridge Operator + +- Implied by the bridge address obtained from `_resolver.resolve("bridge", false)`. + +- Responsible for facilitating the actual transfer of Ether from `Layer 1` to `Layer 2`. This role involves ensuring the bridge operates correctly and securely. + +### Fee Recipient + +- Specified by address `_feeRecipient` in the processDeposits function. + +- This role involves receiving the processing fees collected from batched Ether deposits. Likely, this could be a protocol treasury or maintenance entity. + +### Systemic Risks + +### Bridge Failures + +Reliance on an external bridge for Layer 2 deposits introduces risk; if the bridge has `downtime` or is `compromised`, it could `halt transfers` or lead to `loss of assets`. + +- `Nature of Bridge Failures` : Downtime , Security Compromises + +### Integration Risks + +- `Data Synchronization`: Discrepancies in data format or synchronization between Layer 1 and Layer 2 systems could lead to inconsistencies in user balances or deposit records. + +- `Upgradability and Compatibility` : `LibDepositing` or related contracts are upgradable, there's a risk that updates may introduce incompatibilities or disrupt ongoing deposit processes. + +## LibProposing.sol + +The `LibProposing` library is part of the `Taiko protocol`, designed for handling block proposals within its `Layer 2 (L2)` framework. This library focuses on managing the `submission`, `validation`, and `processing of proposed blocks`, integrating with the broader ecosystem of the Taiko protocol. + +### Key Functions + +- `proposeBlock(TaikoData.State storage _state, TaikoData.Config memory _config, IAddressResolver _resolver, bytes calldata _data, bytes calldata _txList) internal returns (TaikoData.BlockMetadata memory meta_, TaikoData.EthDeposit[] memory deposits_)` : The proposeBlock function allows a participant (typically a block proposer or validator) to propose a new block for the Taiko L2 chain. This is integral for the progression and updating of the blockchain's state. + +#### Security Considerations from proposeBlock() function + +1. The function relies on `_isProposerPermitted` for validating whether the caller can propose a block. If this internal validation relies solely on address checking without additional security measures (e.g., `signatures` or `multi-factor authentication`), it might be susceptible to address spoofing or impersonation attacks. +2. The function has logic for reusing blobs identified by `params.blobHash`. The logic for determining blob reusability (`isBlobReusable`) is flawed or if the reuse conditions are `too lenient`, it could lead to the reuse of `outdated` or incorrect `blob data`, affecting data integrity. +3. The function’s behavior heavily depends on the current state (`_state`) and configuration (`_config`). Incorrect or outdated configuration values can lead to improper block proposals, such as exceeding the allowed block size or gas limits. + +- ` isBlobReusable(TaikoData.State storage _state, TaikoData.Config memory _config, bytes32 _blobHash) internal view returns (bool)` + : Checks if a data blob is reusable based on expiration and protocol configuration to optimize data storage and cost. + +- `_isProposerPermitted(TaikoData.SlotB memory _slotB, IAddressResolver _resolver) private view returns (bool)` :Determines if the current sender is authorized to propose a new block, based on protocol rules and configurations. + +## Roles + +1. `Block Proposer` + Represents the entity (typically an externally owned account, EOA) responsible for calling the proposeBlock function to propose new blocks to the Taiko Layer 2 system. This role involves compiling block data, including transactions and deposit information, and submitting this data to the network. +2. `Assigned Prover` + This is the address designated within a block proposal responsible for providing subsequent proofs or validations for the block. The prover's role is crucial for the integrity and security of the block validation process within Taiko's architecture. + +## Systemic Risks + +- `Chain Integrity` : Errors or vulnerabilities in the block proposal process can compromise the integrity of the entire Layer 2 chain, leading to incorrect state transitions or consensus failures. + +- `Protocol Reliability` : Dependence on accurate `blob handling` and proper block sequencing means that systemic failures (like incorrect parent block references or mishandling of state changes) can disrupt the operational `flow` of the entire protocol. + +## Technical Risks + +- `Resource Exhaustion` : The function involves multiple state updates and external calls, which could lead to high gas consumption, potentially causing `out-of-gas` errors or making `block proposals` prohibitively expensive. + +## Integration Risks + +- `Configuration Management`: Misconfiguration in the `TaikoData.Config` or the address resolver could lead to incorrect behavior, such as invalid block size limits or incorrect fee parameters. + +## LibProving.sol + +LibProving serves as a crucial mechanism for ensuring the integrity and validity of block transitions within the Taiko protocol. It handles the submission and verification of proofs associated with block transitions, enabling the contestation of incorrect transitions and reinforcing the security and accuracy of the blockchain's state. + +### Key Functions + +- `pauseProving(TaikoData.State storage _state, bool _pause)` : This function toggles the pausing status for the block proving process within the Taiko protocol. If `_pause` is true, new proofs cannot be submitted, effectively pausing the proving operations; if false, the proving operations are resumed. This is critical for maintenance or in response to detected issues. + +- `proveBlock(TaikoData.State storage _state, TaikoData.Config memory _config, IAddressResolver _resolver, TaikoData.BlockMetadata memory _meta, TaikoData.Transition memory _tran, TaikoData.TierProof memory _proof)` : Processes proofs for block transitions within the Taiko protocol. It validates and records the `proof` against the specified `transition`, handles transitions between different `proof tiers`, enforces proof validation rules based on the current protocol configuration, and updates the protocol state to reflect the `new proof`. This function is essential for the integrity and security of block transitions in the network. + +- `_createTransition(TaikoData.State storage _state, TaikoData.Block storage _blk, TaikoData.Transition memory _tran, uint64 slot)` : + Internal helper function that ensures the existence and proper initialization of a block transition in the protocol's state. If a transition corresponding to a given parent hash does not exist, it creates one; otherwise, it retrieves the existing transition. This function is crucial for maintaining the continuity and consistency of block transitions within the protocol. + +- `_overrideWithHigherProof(TaikoData.TransitionState storage _ts, TaikoData.Transition memory _tran, TaikoData.TierProof memory _proof, ITierProvider.Tier memory _tier, IERC20 _tko, bool _sameTransition)` : Internal function that manages the logic for updating an existing transition with a new proof of a higher tier. It adjusts the transition's records and handles the transfer of bonds and rewards according to the outcome of the proof submission. This function ensures the protocol adapts to new, more reliable proofs while appropriately rewarding or penalizing the involved parties. + +- `_checkProverPermission(TaikoData.State storage _state, TaikoData.Block storage _blk, TaikoData.TransitionState storage _ts, uint32 _tid, ITierProvider.Tier memory _tier)` : Internal function that verifies whether the sender (prover) is authorized to submit a proof for a particular block transition based on various conditions, such as the timing window and the prover's identity. This function is key to enforcing proof submission policies and preventing unauthorized or premature submissions. + +### Roles + +- `Provers` : Entities responsible for `submitting proofs` to verify the correctness of `block transitions`. They provide necessary `evidence` supporting the validity of the transactions and state transitions within a block. + +- `Contesters` : Participants who challenge the validity of a submitted proof. They play a critical role in maintaining the integrity of the network by identifying and disputing incorrect or malicious proofs. + +- `Protocol Administrators` : Individuals or entities with the authority to pause and unpause the proving process, typically for maintenance or in response to detected vulnerabilities. + +- `Tier Providers` : They define the different tiers of proofs allowed within the system, setting the standards and requirements for each proof level, affecting the security and efficiency of the proving process. + +- `Verifiers` : Smart contracts or entities tasked with validating the submitted proofs according to the protocol's rules and the specific tier's requirements. + +## Systemic Risks + +- `Chain Integrity Failure` : Flaws in the proving mechanism can lead to incorrect block transitions being accepted, compromising the entire chain's integrity. + +- `Protocol Stagnation` : The inability to update or pause proving processes in response to emerging threats could result in systemic failures or persistent vulnerabilities. + +## Technical Risks + +- `Incorrect Proof` : Flaws in `proof generation` or `verification logic` can result in valid transitions being rejected or invalid ones accepted. + +- `Data Handling Errors` : Mismanagement of `transitions`, `proof data`, or `bond information` can lead to inconsistencies, loss of funds, or incorrect state updates. + +## Integration Risks + +- `Configuration Sync` : Ensuring that configurations (e.g., `proof tiers`, `bond amounts`) remain synchronized across different contracts and protocol layers is crucial for consistent operation and security. + +## Admin Abuse Risks + +- `Unauthorized Pausing` : If the pausing functionality is abused by protocol administrators, it could lead to unnecessary disruptions in the proving process or be used to censor specific provers or contesters. + +- `Manipulation of Proofs and Tiers` : Administrators with the ability to alter proof requirements or tier parameters could unfairly influence the proving process, benefiting certain parties over others or compromising the network's security. + +- `Improper Bond Management` : Misuse of admin privileges could lead to inappropriate handling of validity and contest bonds, potentially resulting in unjust enrichment or unwarranted penalties. + +## LibVerifying.sol + +The `LibVerifying` library is part of the Taiko protocol and is designed for handling the verification of block transitions in the protocol's Layer 2 solution. This library includes mechanisms for initializing the `protocol state`, `verifying blocks`, and ensuring the continuity and integrity. + +### Key Functions + +- `init(TaikoData.State storage _state, TaikoData.Config memory _config, bytes32 _genesisBlockHash)` : Sets up initial protocol state using specified configuration and genesis block hash, ensuring the protocol is ready for operation from a clearly defined starting point. + +- `verifyBlocks(TaikoData.State storage _state, TaikoData.Config memory _config, IAddressResolver _resolver, uint64 _maxBlocksToVerify)` : Processes and verifies up to `_maxBlocksToVerify` blocks based on established transition rules and updates their state as verified, maintaining blockchain integrity. + +- `_syncChainData(TaikoData.Config memory _config, IAddressResolver _resolver, uint64 _lastVerifiedBlockId, bytes32 _stateRoot)` : + Internally updates external systems with the latest verified blockchain data, ensuring consistency across the protocol and external references. + +- `_isConfigValid(TaikoData.Config memory _config)` : Performs checks on protocol configuration parameters to ensure they fall within acceptable ranges and meet operational requirements, guarding against misconfigurations. + +## Lib1559Math.sol + +The `Lib1559Math` library is designed to implement a bonding curve based on the exponential function (`e^x`) for the Ethereum fee market mechanism, as proposed by `EIP-1559`. + +### Key Functions + +- `basefee(uint256 _gasExcess, uint256 _adjustmentFactor)`: Validates input parameters to avoid division by zero or other invalid operations. It then calculates the new base fee using the provided formula and adjustments based on EIP-1559 guidelines. + +- `_ethQty(uint256 _gasExcess, uint256 _adjustmentFactor)` : Performs safety checks and scales the input to prevent overflow issues. It uses a fixed-point math library (`LibFixedPointMath`) to handle the exponential function calculation, which is not natively supported in Solidity with high precision. + +### Technical Risks + +- `Fixed-Point Precision` : Due to Solidity’s lack of native floating-point support, fixed-point arithmetic might introduce rounding errors, affecting the precision of fee calculations. + +## TaikoL2.sol + +The TaikoL2 contract is part of a Layer 2 solution that manages cross-layer message verification and implements EIP-1559 gas pricing mechanisms for L2 operations. + +#### This contract is designed to: + +- Anchor `L1 block` information to `L2`, enabling `cross-layer communication` and `verification`. +- Manage dynamic gas pricing on `L2` based on `L1` congestion levels, aligning with `EIP-1559` mechanisms. +- Store verified `L1 block` information to maintain a history of state transitions between layers. + +### Key Functions + +- `init(address _owner, address _addressManager, uint64 _l1ChainId, uint64 _gasExcess)` : Initializes the `Taiko L2` contract with basic setup, including `ownership`, `address resolution`, and initial `gas excess` values for `EIP-1559 calculations`. + +- `anchor(bytes32 _l1BlockHash, bytes32 _l1StateRoot, uint64 _l1BlockId, uint32 _parentGasUsed)` : Anchors the latest `L1` block details to `L2` , updating the contract with the most recent `block hash`, `state root`, `block height`, and `gas` usage. This function is critical for maintaining `L1-L2` consistency and is restricted to specific authorized addresses. + +- `withdraw(address _token, address _to)` : Enables the withdrawal of tokens or Ether from the contract, typically reserved for the contract owner or a designated withdrawer, adding a layer of operational flexibility and security. + +- `getBasefee(uint64 _l1BlockId, uint32 _parentGasUsed)` : Provides the calculated `base fee` per gas for `L2` transactions based on L1 congestion metrics, applying the EIP-1559 model to L2 operations. This function is crucial for `gas pricing` and network economics. + +- `getBlockHash(uint64 _blockId)` : Retrieves the hash for a specified L2 block number, aiding in data verification and block tracking within the L2 environment. + +- `getConfig()` : Returns the current EIP-1559 configuration parameters used for gas pricing on L2, including the target gas per block and the base fee adjustment quotient. + +- `skipFeeCheck()` : + A function potentially used for simulations or testing environments where base fee mismatch checks can be bypassed, offering flexibility in non-production environments. + +- `_calcPublicInputHash(uint256 _blockId)` : Calculates the hash of public inputs, aiding in the verification and integrity checks of L2 blocks, particularly important for ensuring consistency and security in cross-layer communications. + +- `_calc1559BaseFee(Config memory _config, uint64 _l1BlockId, uint32 _parentGasUsed)` : Internal function that calculates the dynamic base fee for L2 transactions, inspired by EIP-1559's algorithm, considering the excess gas and adjusting for L1 block intervals to manage network congestion effectively. + +### Weak Spots As per implementations + +- Fixed `BLOCK_SYNC_THRESHOLD` : + +```solidity + +uint8 public constant BLOCK_SYNC_THRESHOLD = 5; + +``` + +The `BLOCK_SYNC_THRESHOLD` is hardcoded, limiting `flexibility` and `adaptability` to changing `network conditions`. + +- `Base Fee Calculation and Validation` : + +```solidity + +if (!skipFeeCheck() && block.basefee != basefee) { + revert L2_BASEFEE_MISMATCH(); +} + +``` + +Assumes `basefee` calculations always align with `L1` expectations without accommodating for potential variances or future updates in gas pricing. + +- `Gas Excess Handling` + +```solidity + +gasExcess = _gasExcess; + +``` + +State changes like updates to gasExcess do not trigger event emissions, reducing transparency and traceability. + +- Handling of Chain Reorganizations + +```solidity + +l2Hashes[parentId] = blockhash(parentId); + +``` + +Assumes the immutability of `L1 block` hashes stored in `L2` without mechanisms to address possible `L1 chain` reorganizations affecting these references. + +### Roles + +- `Contract Owner/Administrator` : Manages contract settings, including `EIP-1559` parameters and access controls. They are responsible for the `initial setup` and ongoing adjustments based on `network conditions`. + +- `Golden Touch Address` : Authorized entity allowed to perform the anchor operation, updating `L2` with the latest `L1 block ` details. This role is crucial for maintaining `L1-L2 consistency`. + +- `Token Withdrawers` : Specific addresses with permission to `withdraw tokens` or `ETH` from the contract. This role typically involves managing `contract funds` and ensuring liquidity. + +### Systemic Risks + +1. `L1-L2 Desynchronization` : Failure in regularly updating `L2 with L1` block details can lead to inconsistencies between layers, affecting `cross-layer` operations and communications. + +2. `Misalignment of Economic Models` : Incorrect implementation or management of `EIP-1559` features on `L2` could lead to economic imbalances, affecting `user transaction` costs and `network congestion`. + +3. `Fee Instability` : Poor calibration of `EIP-1559` parameters could result in unpredictable gas fees and network congestion, deteriorating the user experience and L2 operational efficiency. + +### Integration Risks + +- `Cross-Chain Communication Failures` : Errors in cross-layer message verification or disruptions in `L1-L2` communications could `impede` essential contract functionalities. + +- `Incompatibility with Existing Protocols` : Updates or changes in L1 mechanisms, including `EIP-1559 adjustments`, require timely updates on `L2`; failure to do so may lead to `integration issues`. + +### Admin Abuse Risks + +- `Centralized Control Over Anchoring` : Excessive control by the `Golden Touch` Address over the anchoring process could be abused, impacting the `L2's` alignment with `L1`. + +## Bridge.sol + +The `Bridge` contract serves as a vital component within a `cross-chain communication framework`, enabling the `transmission`, `management`, and `execution of messages` between different `blockchain networks`. It supports `EIP-1559` gas pricing adjustments for `Layer 2 (L2)` operations and ensures secure `cross-layer message` verification. + +### Key Functions + +- `init(address _owner, address _addressManager)` : Sets up the contract with an owner and links it to an address manager for other contract references. + +- `suspendMessages(bytes32[] calldata _msgHashes, bool _suspend)` : Allows toggling the processing state of messages (suspend or unsuspend) based on their hashes. + +- `banAddress(address _addr, bool _ban)` : Enables or disables the ability for a specific address to participate in message sending or receiving. + +- `sendMessage(Message calldata _message)` : Facilitates sending a cross-chain message, recording its details and emitting an event. + +- `recallMessage(Message calldata _message, bytes calldata _proof)` : Allows the sender to recall a message before it's processed on the destination chain. + +- `processMessage(Message calldata _message, bytes calldata _proof)` : Processes an incoming message if validated, performing the instructed action. + +- `retryMessage(Message calldata _message, bool _isLastAttempt)` : Offers a sender another attempt to execute a previously failed message. + +- `isMessageSent(Message calldata _message)` : Checks if a message has already been sent, based on its content. + +- `proveMessageFailed(Message calldata _message, bytes calldata _proof)` : Asserts a message has been marked as failed on its destination chain. + +- `proveMessageReceived(Message calldata _message, bytes calldata _proof)` : Verifies that a message has been received on the destination chain. + +- `isDestChainEnabled(uint64 _chainId)` : Determines if the contract is set up to send messages to a specific chain. + +- `context()` : Retrieves the current operational context of the bridge, used for tracking and validation purposes. + +- `getInvocationDelays()` : Provides the time delays enforced before a message can be executed, important for security and order. + +- `hashMessage(Message memory _message)` : Generates a unique identifier for a message based on its content. + +- `signalForFailedMessage(bytes32 _msgHash)` : Creates a unique identifier for failed messages to help manage message lifecycles. + +- `_authorizePause(address)` : Internal function to check if the calling address has permission to pause or unpause the bridge. + +- `_invokeMessageCall(Message calldata _message, bytes32 _msgHash, uint256 _gasLimit)` : Executes the message call with specified parameters. + +- `_updateMessageStatus(bytes32 _msgHash, Status _status)` : Changes the status of a message, ensuring its lifecycle is accurately tracked. + +- `_resetContext()` : Clears the current operational context after a message has been processed. + +- `_storeContext(bytes32 _msgHash, address _from, uint64 _srcChainId)` : Sets the operational context for a message being processed. + +- `_loadContext()` : Fetches the current operational context from storage. + +- `_proveSignalReceived(address _signalService, bytes32 _signal, uint64 _chainId, bytes calldata _proof)` : Validates that a specific signal (indicative of a message's status) has been correctly received and recorded. + +### Technical Improvements Suggestions + +#### Gas Limit Handling in Message Execution + +- `Weak Spot` : The `_invokeMessageCall` method decides on a `gas limit` for executing a message based on whether the sender is the `destOwner`. This can lead to `unpredictable execution` outcomes if not enough gas is provided. + +- `Improvement` : Introduce a gas estimation mechanism for `cross-chain calls` to `dynamically` adjust gas limits based on the `payload's complexity`. Implement a `safety margin` to cover unexpected gas usage. + +#### Message Status Transition + +- `Weak Spot`: The `_updateMessageStatus` method updates the status without considering the full lifecycle or potential race conditions of message processing. + +- `Improvement` : Implement `state machine logic` that enforces strict transitions between message statuses to prevent `invalid state changes`. Use events to log all status transitions for transparency. + +#### Cross-Chain Proof Validation + +- `Weak Spot`: The `_proveSignalReceived` function relies heavily on external `SignalService` responses without additional `validation layers`, which could be a `single point of failure` or `exploitation`. + +- `Improvement` : Enhance cross-chain message validation by introducing `layered checks`, such as `multi-sourced proof` aggregation or implementing `zero-knowledge proofs` for more secure and decentralized validation processes. + +#### Address Banning Logic + +- `Weak Spot` : The `banAddress` function switches the ban `status` without `context` or `granularity`. `Arbitrary banning` could disrupt operations and affect `user trust`. + +- `Improvement` : Implement `time-bound` or `context-sensitive banning` , allowing temporary restrictions based on specific behaviors. Provide a `transparent process` and criteria for `banning` and `unbanning addresses`. + +### Roles + +- `Bridge Watchdog` : A specialized role, typically automated or part of a security protocol, responsible for suspending faulty messages and banning malicious addresses. + +- `Signal Service` : External system or service that verifies the sending and receipt of cross-chain messages, ensuring message integrity across chains. + +### Systemic Risks + +1. `Chain Synchronization Failures` : Discrepancies between `L1` and `L2` states due to failed `anchor operations` can lead to systemic inconsistencies, affecting `message validity` and `execution`. + +2. `Gas Pricing Anomalies` : Incorrect management or calculation of `EIP-1559` gas parameters could lead to `inflated transaction costs` or `network congestion`. + +3. `Cross-Chain Communication Breakdown`: Failures in message verification or delivery could disrupt the interoperability and functionality of connected blockchain ecosystems. + +### Integration Risks + +- `Interface Mismatches` : Inconsistencies between expected and actual behaviors of interconnected systems or changes in external contract interfaces could lead to integration issues. + +- `Message Replay or Loss` : Without proper `nonce management` or `message tracking`, messages could be replayed or lost, leading to double spending or information loss. + +## BridgedERC20.sol , BridgedERC20Base.sol , BridgedERC721.sol , BridgedERC1155.sol + +The contracts `BridgedERC20`, `BridgedERC20Base`, `BridgedERC721`, and `BridgedERC1155` are part of a system designed for bridging tokens (`ERC20`, `ERC721`, and `ERC1155` standards) across different blockchain networks. Each serves a different purpose within the context of `token bridging`. + +#### This `BridgedERC20Base` contract serves as a base for bridged ERC20 tokens, focusing primarily on the migration aspect. + +- `changeMigrationStatus` : Enables starting or stopping migration to or from a specific contract. +- `mint` : Mints new tokens, typically called by an authorized bridge contract, especially during inbound migration. +- `burn` : Burns tokens, used during outbound migration or when removing tokens from circulation on the current chain. +- `owner` : Overrides the owner function to maintain compatibility with the IBridgedERC20 interface. + +#### This contract is designed for handling `bridged ERC20` tokens. + +- `setSnapshoter` : Sets the address authorized to take snapshots of the token's state. +- `snapshot` : Allows the snapshooter or contract owner to create a snapshot of token balances. +- `name`, `symbol`, `decimals` : Overrides standard ERC20 functions to provide names, symbols, and decimal counts that may include bridging-specific details. +- `canonical` : Returns the original token's address and chain ID. +- `_mintToken`, `_burnToken` : Internal functions to handle minting and burning of tokens as part of the bridging process. + +#### `BridgedERC721` designed for ERC721 tokens + +- `mint`, `burn` : Functions allowing minting new tokens or burning existing ones, usually controlled by a bridge entity to facilitate cross-chain movements. +- `name`, `symbol`: Provide metadata for the bridged tokens, potentially incorporating cross-chain information. +- `tokenURI`: Generates the URI for token metadata, which might include cross-chain details or reference the original token's metadata. +- `source`: Returns the source token's address and source chain ID, identifying the original token and its native blockchain. + +#### `BridgedERC1155` contract is for bridging `ERC1155` tokens + +- `mint`, `mintBatch` : Allow for minting single or multiple types of tokens to an address, controlled by an authorized entity for bridging purposes. +- `burn` : Enables burning tokens from an address, used typically in token bridging scenarios to signify moving tokens out of the current chain. +- `name`, `symbol` : Return the token's name and symbol with potential modifications to indicate their bridged status. +- `_beforeTokenTransfer` : Implements checks before token transfers, similar to `BridgedERC721` , ensuring that transfers comply with bridging rules and contract status. + +### Roles + +#### Owner + +The owner is typically the primary authority in the contract, capable of performing critical actions such as initializing the contract, changing migration statuses, and updating critical contract parameters. + +#### Snapshooter + +In the `BridgedERC20` contract, a `snapshooter` role is defined. This role is allowed to create snapshots of the token state at specific block numbers. Snapshots can be important for various reasons, such as governance decisions or verifying token distributions at a certain point in time. + +#### Implementations and Access Control + +- OpenZeppelin's `Ownable` for the `owner role`. +- Custom access controls or OpenZeppelin's `AccessControl` for managing roles like `snapshooter` or specific `vault access`. +- Modifier checks (such as `onlyOwner`, `onlyFromNamed`("erc20_vault"), `onlyOwnerOrSnapshooter`) to restrict function execution to certain roles. + +## Systemic Risks + +- `Cross-Chain Consistency` : Ensuring consistent state and tokenomics across chains is challenging. Discrepancies can lead to arbitrage opportunities that might be exploited unfairly. + +## Integration Risks + +- `Data Availability and Validity` : The bridge relies on the availability and accuracy of data from both the `source` and `destination chains`. Issues such as data unavailability, latency, or incorrect data can lead to `erroneous` bridging operations. + +- `Token Standards Compatibility` : Bridged tokens must `adhere` to the standards of their respective blockchains. Any deviation or incompatibility, especially during upgrades or when integrating with new chains, can lead to loss of funds or broken functionalities. + +## Areas to improve in Token Bridges + +- `Rate Limiting` : Implement rate-limiting for minting and burning actions to prevent potential abuse or drastic token supply changes. +- `URI Management` : Implement a flexible mechanism for managing token URIs, especially if they need to represent cross-chain metadata accurately. +- `Token Recovery` : Implement a secure method to allow recovery of `ERC721` tokens sent by mistake. +- `Customizable Token Metadata`: Provide functions to adjust token metadata dynamically to reflect its cross-chain nature better. +- `Pausing Mechanism` : Implement a pausing mechanism specific to bridging actions while allowing other ERC1155 actions, providing a more granular control during emergencies. + +## BaseVault.sol , ERC1155Vault.sol , ERC20Vault.sol , ERC721Vault.sol + +These `BaseVault.sol` , `ERC1155Vault.sol` , `ERC20Vault.sol` , `ERC721Vault.sol` four contracts form an integral part of a cross-chain bridging solution, allowing for the `secure`, `controlled`, and `verified transfer` of different types of tokens (`fungible`, `non-fungible`, and `semi-fungible`) across blockchain networks. They ensure that `assets` moving between chains are properly `locked`, `transferred`, and `unlocked` (or minted) following the protocols and security standards necessary for cross-chain interoperability. + +### Key Functions + +- `supportsInterface` : Implements the ERC165 standard by indicating whether the contract implements a specific interface, enhancing interoperability and type recognition. +- `checkProcessMessageContext` and `checkRecallMessageContext` : These functions validate that the message processing or recalling occurs in a legitimate context, specifically verifying that the caller is the bridge and the operation conforms to expected parameters. +- `sendToken` : Handles the deposit of ERC1155 tokens into the vault and initiates their cross-chain transfer by crafting and sending a bridge message. +- `onMessageInvocation` : Processes incoming bridge messages to either mint new bridged tokens or release previously locked tokens, depending on the message content. +- `onMessageRecalled` : Reacts to bridge messages being recalled, typically resulting in the return of tokens to their original depositor if a cross-chain transfer is cancelled or reverted. +- `changeBridgedToken` : Allows the management of bridged token representations, enabling updates to the token mapping as necessary. +- `_handleMessage` : Prepares and validates data for cross-chain communication, ensuring that token transfers are correctly represented and authorized. +- `_getOrDeployBridgedToken` and `_deployBridgedToken` : Manage the lifecycle of bridged tokens, including their creation when first encountered. + +## SgxVerifier.sol + +The `SgxVerifier` contract provides functionalities related to SGX (Software Guard Extensions) attestation and verification within a blockchain environment. + +### Key Functions + +- `addInstances(address[] calldata _instances)` : Allows the owner to add new SGX instances to the registry. Each instance represents an SGX enclave identified by its Ethereum address. This function emits an InstanceAdded event for each new instance. + +- `deleteInstances(uint256[] calldata _ids)` : Enables removal of SGX instances from the registry, typically invoked by the contract owner or a specific authorized entity (like a watchdog). It emits an InstanceDeleted event for each instance removed. + +- `registerInstance(V3Struct.ParsedV3QuoteStruct calldata _attestation)` : Registers a new SGX instance after verifying its remote attestation quote. This function is designed to work with an attestation service that confirms the integrity and authenticity of an SGX enclave. + +- `verifyProof(Context calldata _ctx, TaikoData.Transition calldata _tran, TaikoData.TierProof calldata _proof)` : Verifies a cryptographic proof provided by an SGX instance. It's used to ensure that data or a computation (represented by \_tran) was correctly processed by an SGX enclave. This function is central to trust and security, especially in cross-chain or L2 scenarios. + +- `getSignedHash(TaikoData.Transition memory _tran, address _newInstance, address _prover, bytes32 _metaHash)` : Constructs a hash intended to be signed by an SGX instance. This forms the basis of verifying the legitimacy and integrity of data processed by the SGX enclave. + +- `_addInstances(address[] memory _instances, bool instantValid)` : A private function to add SGX instances to the registry. It handles the logic for assigning instance IDs and setting validity times. + +- `_replaceInstance(uint256 id, address oldInstance, address newInstance)` : Replaces an existing SGX instance with a new one in the registry. This might be needed if the SGX enclave's keys are rotated or if the enclave needs to be updated. + +- `_isInstanceValid(uint256 id, address instance)` : Checks if an SGX instance is currently valid based on its ID and address. This includes checking whether the instance is within its valid time frame. + +### Roles + +- `Watchdog` : A specific role or entity authorized to `remove SGX instances` from the registry, likely for security or operational reasons. +- `SGX Enclave` (Instance): Represents an operational `SGX enclave` that performs computations or data processing securely. + +### Systemic Risks + +#### Risks that affect the entire system or network + +`SGXVerifier` could be a widespread vulnerability or flaw in the `SGX` technology itself, such as a `side-channel` attack that compromises all `SGX enclaves` globally. Another example is reliance on a single attestation service that, if compromised, could invalidate the trustworthiness of all instances. + +## Architecture Assessment of Business Logic + +### Taiko Architecture + +![S FQQ}$}4 0EQ D@A1 AEJY](https://gist.github.com/assets/58845085/cec452ea-3d0e-4917-bddc-ca787b07bf4f) + +- Taiko Protocol acts as the main component, managing all functionalities and contract interactions. +- Bridge facilitates cross-chain communications and interactions with external blockchains. +- EssentialContract provides foundational functionalities. +- SignalService handles signals and events across blockchains. +- BridgedERC20, BridgedERC721, BridgedERC1155 represent contract mechanisms for managing token operations across different token standards. +- ERC20Vault, ERC721Vault, ERC1155Vault are specialized contracts that manage respective token assets within the Taiko ecosystem. +- LibAddress and ExcessivelySafeCall are utility functionalities utilized within the contracts. +- ChainSignals represents the blockchain events and signals communicated to and from the Signal Service. + +## Bridge + +### Sequence Flow + +![(62ZGA`CAOCFLQH0Z~WM$CH](https://gist.github.com/assets/58845085/a8c9980a-3eea-4f35-b494-49fb1cad95fb) + +![F2}IGL3X{ )~%7$N_6OQ59H](https://gist.github.com/assets/58845085/1fcc0a86-cab1-40a3-a584-7e342a35cc65) + +## Invariants Generated + +- `Message ID Invariant` : The nextMessageId must only increase over time. This ensures that each outgoing message has a unique identifier. + +```solidity + +uint128 public nextMessageId; + +``` + +Invariant: For any two messages, if message1 was sent before message2, then message1.id < message2.id. + +- `Message Status Invariant`: Each message identified by its hash (msgHash) should have a status that reflects its current state accurately and should transition between states according to the contract's logic. + +```solidity +mapping(bytes32 => Status) public messageStatus; +``` + +Invariant: messageStatus can transition from NEW -> RECALLED or NEW -> DONE or NEW -> RETRIABLE, but once it moves to DONE, RECALLED, or FAILED, it cannot change. + +- `Address Ban Invariant` : If an address is banned, it cannot be used for invoking message calls. + +```solidity + +mapping(address => bool) public addressBanned; + +``` + +Invariant: If addressBanned[addr] is true, then addr should not successfully invoke message calls. + +- `Invocation Delay Invariant`: Messages must respect the invocation delay, ensuring that they are processed only after a specified time since their reception. + +```solidity + +function getInvocationDelays() public view returns (uint256, uint256); + +``` + +Invariant: A message can only be processed after invocationDelay seconds have passed since it was received, as recorded in proofReceipt. + +- `Value Transfer Invariant` : The value (Ether) sent within a message must match the expected value defined in the message structure. + +```solidity + +uint256 expectedAmount = _message.value + _message.fee; + +``` + +Invariant: The sum of `_message.value` and `_message.fee` must equal msg.value when sending or recalling a message. + +- `Migration Status Invariance` : If migration is inbound, no new tokens should be minted. If migration is outbound, tokens can only be minted by the migration target. + +- `Message Processing Invariance` : When a message is being processed from the bridge, it should follow the proper authentication and execution flow without state inconsistencies. + +- `Ownership Tracking Invariant`: Each NFT must be associated with one owner at a time as tracked by the contract. + +```solidity + +mapping(uint256 => address) public nftOwners; + +``` + +Invariant: `nftOwners[tokenId]` must match the current owner of the NFT for all tokenId. + +- `Access Control Invariant` : Only authorized users (like the contract owner or designated roles) can perform critical functions like minting or burning tokens. + +```solidity +mapping(address => bool) public isAuthorized; + +``` + +Invariant: Functions like `mint()` or `burn()` can only be called by addresses where `isAuthorized[caller] == true`. + +- `Timestamp Invariant` : The timestamp for the last price update must always be less than or equal to the current block time. + +```solidity + +mapping(address => uint256) public lastUpdateTime; + +``` + +Invariant: lastUpdateTime[asset] <= now for all assets. + +- `Proposal State Invariant` : A proposal's state must follow the correct lifecycle transitions. + +```solidity + +enum ProposalState { Pending, Active, Defeated, Succeeded, Executed } +mapping(uint256 => ProposalState) public state; + +``` + +Invariant: State transitions must follow logical order, e.g., Pending -> Active -> (Defeated | Succeeded) -> Executed. + +## Approach Taken in Evaluating Taiko Protocol Contracts + +I have analyzed the contracts that are high priority contracts + +``` +EssentialContract.sol +LibTrieProof.sol +LibDepositing.sol +LibProposing.sol +LibProving.sol +LibVerifying.sol +Lib1559Math.sol +TaikoL2.sol +SignalService.sol +Bridge.sol +BridgedERC20.sol +BridgedERC20Base.sol +BridgedERC721.sol +BridgedERC1155.sol +BaseVault.sol +ERC1155Vault.sol +ERC20Vault.sol +ERC721Vault.sol +SgxVerifier.sol + +``` + +### 1. Structural Analysis and Interdependencies: + +- `Contractual Relationships`: Identify the relationships between Taiko's core contracts, such as Omnipool, cross-chain bridges, and liquidity provision mechanisms. +- `Flow of Assets` : Trace how assets move within the system, focusing on token wrapping, unwrapping, and the impact of these movements on liquidity and trading. + +### 2. Security Analysis tailored to Taiko: + +- `Cross-Chain Security`: Assess the integrity and security of the cross-chain messaging and bridge mechanisms, crucial for Taiko's interoperability features. +- `Smart Contract Vulnerabilities` : Beyond standard checks, focus on issues prevalent in DeFi protocols like flash loan attacks, price manipulation, and oracle failure. + +### 3. Financial Logic and Economics: + +- `Fee Structures and Incentives` : Delve into Taiko's fee structures, reward systems, and their alignment with user and protocol incentives. +- `Liquidity and Slippage Models` : Analyze the mathematical models underpinning liquidity provisions, pricing, and slippage +- `Tokenomics` : Review the tokenomics specific to Taiko, considering burn mechanisms, staking rewards, and governance features. + +### 4. Optimization and Efficiency: + +- `Gas Optimization` : Given the complex interactions within DeFi contracts, identify gas-intensive code paths and propose optimizations. +- `Contract Efficiency` : Focus on the efficiency of algorithms particular to Taiko, such as those used in the Omnipool for asset rebalancing and price calculation. + +### 5. Comparative Analysis: + +- `Against DeFi Standards` : Compare Taiko's approaches, particularly the Omnipool, with industry standards and leading protocols in similar spaces. +- `Innovations and Distinctions` : Highlight and evaluate Taiko's novel contributions to the DeFi space, ensuring they contribute positively to security, user experience, and financial fairness. + +### 6. Final Compilation and Strategy Development: + +- `Critical Findings on Taiko's Uniqueness` : Summarize findings with a focus on aspects unique to the Taiko Protocol, providing a clear picture of its standing in the DeFi space. +- `Targeted Recommendations`: Offer recommendations that respect Taiko's unique mechanisms and market position, ensuring advice is actionable and directly relevant. +- `Enhancement Proposals` : Propose enhancements based on Taiko's long-term vision and specific technical and financial frameworks, fostering innovation while ensuring security and stability. + +## Software engineering considerations (`Codebase Quality`) + +Based on the contracts and discussions related to Taiko protocol, here’s an in-depth code quality analysis + +### Architecture & Design + +The Taiko protocol employs a clear modular architecture, dividing functionalities into distinct contracts like `LibProving`, `LibVerifying`, `Bridged Tokens` (`ERC20`, `ERC721`, `ERC1155`), and `Vaults`. This division enhances the clarity and maintainability of the code. Libraries and modular components, such as `SgxVerifier`, are used strategically to encapsulate complex logic, ensuring scalability and reducing gas costs. + +- `Suggestions`: Continue emphasizing modularity and separation of concerns in future developments. Consider abstracting common patterns into libraries for reuse across contracts. + +### Upgradeability & Flexibility + +Taiko's contracts exhibit a static nature with `minimal` emphasis on `upgradeability patterns`. While this approach might contribute to security, it could limit flexibility and adaptability to protocol upgrades or bug fixes. + +- `Suggestions` : Explore and possibly integrate `upgradeable contract patterns`, such as `Proxy` or `Beacon`, ensuring that upgrade governance is transparent and secure. + +### Community Governance & Participation + +Taiko includes mechanisms like SGXVerifier for decentralized verification, indicating steps toward community-driven governance. However, detailed mechanisms or DAO structures for wider community participation and governance might not be fully fleshed out. + +- `Suggestions` : Develop and document clear governance models enabling `token holder proposals`, `voting`, and `implementation processes`. Enhance `community interaction tools` and `platforms`. + +### Error Handling & Input Validation + +Functions throughout the Taiko codebase implement rigorous condition checks and validate inputs effectively, minimizing the risk of erroneous or malicious transactions. + +- `Suggestions` : Ensure comprehensive input validation, particularly for `cross-contract` calls and interactions with external `tokens` and `data`. Consider `edge cases` and `adversarial inputs` consistently. + +### Code Maintainability and Reliability + +Taiko contracts are well-documented, and each serves a clearly defined role within the ecosystem. Usage of Solidity best practices and adherence to security standards indicates a strong foundation for future reliability. + +- `Suggestions` : Introduce mechanisms to reduce centralized control aspects, such as multi-sig or timelocked admin actions. This would enhance trust and decentralization. + +### Code Comments + +Extensive commenting throughout the Taiko codebase facilitates understanding and auditability. Complex operations, especially in `LibVerifying` and `cryptographic parts`, are well-explained. + +- `Suggestions` : Continue maintaining high-quality comments, especially when introducing new complex mechanisms or when modifying existing ones. Ensure comments remain updated with code changes. + +### Code Structure and Formatting + +The codebase demonstrates consistent formatting and structuring, adhering to Solidity’s best practices, which improves readability and code management. + +- `Suggestions` : Where possible, further refine code modularization. Document and enforce coding standards for future contributions. + +### Strengths + +The protocol's innovative approach, particularly in integrating cross-chain functionalities and SGX verification mechanisms, stands out. The implementation of bridged assets and vault strategies showcases a forward-thinking approach to DeFi solutions. + +### Documentation + +Inline code documentation is thorough, aiding immediate comprehension. However, external documentation might lag behind the latest codebase developments. + +## Test Coverage analysis + +In evaluating the 79% coverage for Taiko, it's essential to consider the following aspects + +- `Critical Paths Coverage` : Examine whether the tests adequately cover the critical paths of the Taiko protocol, especially core functionalities like transaction processing, smart contract interactions, and security mechanisms. High-risk areas should ideally have near 100% coverage to ensure stability and security. + +- `Integration and End-to-end Tests` : Check if the 79% coverage mainly comes from unit tests, or if it also includes integration and end-to-end tests. Integration tests are crucial for protocols like Taiko, where different components and smart contracts must interact correctly. + +- `Areas for Improvement` : Based on the uncovered areas and critical functionalities, identify where adding tests could be most beneficial. Focus on parts of the code that are prone to changes, have had historical bugs, or involve complex logic. + +- `Coverage Goals` : Set realistic goals for improving test coverage. While 100% coverage is often impractical, identify key areas where increased coverage could reduce risk and improve code confidence. + +## What ideas can be incorporated ? + +- `Algorithmic Stablecoins` : Explore the integration or development of algorithmic stablecoins to offer users stable value transfer mechanisms within the Taiko ecosystem. + +- `Interoperable Token Standards` : Explore and adopt interoperable token standards that facilitate cross-chain interactions and improve compatibility with other protocols and blockchain ecosystems. This can enhance liquidity and user reach. + +- `Layer 2 and Cross-Chain Solutions` : Explore and integrate Layer 2 solutions or cross-chain interoperability features to improve transaction speeds, reduce costs, and expand the user base. This could involve leveraging existing bridges, rollups, or custom solutions tailored to Taiko's needs. + +- `Dynamic Fee Structure` : Implement a dynamic fee structure based on network congestion, transaction size, or market conditions. This could help optimize costs for users while ensuring the protocol remains financially sustainable. Additionally, consider introducing fee discounts or rebates for frequent users or large liquidity providers. + +- `Protocol-Owned Liquidity` : Explore the concept of protocol-owned liquidity to reduce dependency on external liquidity providers and improve the protocol's self-sustainability and control over its market operations. + +## Issues surfaced from Attack Ideas in README + +- `Merkle Proof Verification` (`LibVerifying.sol`) + Incorrect implementation or manipulation of Merkle tree proofs could result in invalid transactions being accepted or valid transactions being rejected. +- `Block Production and Verification` (`LibVerifying.sol`) + Vulnerabilities in block production and verification could lead to blockchain integrity issues, such as double-spending or block withholding attacks. +- `Token Bridging and Minting` (`BridgedERC20.sol`, `BridgedERC721.sol`, `BridgedERC1155.sol`) + Exploitation in token bridging logic may lead to unauthorized minting or burning of tokens, impacting asset integrity across chains. +- `Liquidity Management` (`TaikoL2.sol`, `BaseVault.sol`) + Insufficient validation and control in liquidity addition or removal could lead to market manipulation or pool imbalances. +- `Smart Contract Upgradeability and Governance` (`EssentialContract.sol`) + Centralized control or flawed governance mechanisms could lead to unauthorized protocol changes or exploitation. +- `Oracle Dependence and Price Feeds` (`Lib1559Math.sol``) + Dependence on external oracles for price feeds may lead to price manipulation or oracle failure, impacting system operations. +- `Cross-Chain Communication and Security` (`Bridge.sol`, `BaseVault.sol`) + Inadequate security in cross-chain communication could lead to replay attacks or message forgery. +- `Asset Decimal Handling and Conversion` (`LibMath.sol`, `Lib1559Math.sol`) + Incorrect handling of asset decimals could lead to rounding errors or imbalances in asset valuation. +- `Token Management and Security` (`BridgedERC20.sol`, `BridgedERC721.sol`, `BridgedERC1155.sol`) + Flaws in token management functions (e.g., mint, burn) could result in unauthorized token creation or destruction. + +## Time Spend + +50 Hours + +### Time spent: + +50 hours diff --git a/packages/protocol/docs/analysis/kaveyjoe-Analysis.md b/packages/protocol/docs/analysis/kaveyjoe-Analysis.md new file mode 100644 index 00000000000..c02ec09ac44 --- /dev/null +++ b/packages/protocol/docs/analysis/kaveyjoe-Analysis.md @@ -0,0 +1,778 @@ +# Taiko Advanced Analysis Report + +![Taik Profile ](https://github.com/kaveyjoe/Assests/blob/main/Taiko%20Profile.png) + +## 1. Introduction + +An Ethereum-equivalent ZK-Rollup allows for scaling Ethereum without sacrificing security or compatibility. Advancements in Zero-Knowledge Proof cryptography and its application towards proving Ethereum Virtual Machine (EVM) execution have led to a flourishing of ZK-EVMs, now with further design decisions to choose from. Taiko aims to be a decentralized ZK-Rollup, prioritizing Ethereum-equivalence. Supporting all existing Ethereum applications, tooling, and infrastructure is the primary goal and benefit of this path. Besides the maximally compatible ZK-EVM component, which proves the correctness of EVM computation on the rollup, Taiko must implement a layer-2 blockchain architecture to support it. + +Taiko aims to be a fully Ethereum-equivalent ZK-Rollup. aim to scale Ethereum in a manner that emulates Ethereum itself at a technical level, and a principles level. + +**Taiko consists of three main parts**: + +- the ZK-EVM circuits (for proof generation) +- the L2 rollup node (for managing the rollup chain) +- the protocol on L1 (for connecting these two parts together for rollup protocol verification). + Blocks in the Taiko L2 blockchain consist of collections of transactions that are executed sequentially. New blocks can be appended to the chain to update its state, which can be calculated by following the protocol rules for the execution of the transactions. + +### 1.1 How Does Taiko Work? + +Taiko operates by utilizing a Zero Knowledge Rollup (ZK-Rollup) mechanism, specifically designed to scale the Ethereum blockchain without compromising its foundational features of security, censorship resistance, and permissionless access. Here's a breakdown of how Taiko functions: + +- Zero Knowledge Proofs (ZKPs): Taiko leverages ZKPs to validate transactions confidentially, reducing data processing on Ethereum's mainnet. This efficiency cuts costs and increases transaction speed. +- Integration with Ethereum L1: Unlike rollups that use a centralized sequencer, Taiko's transactions are sequenced by Ethereum's Layer 1 validators. This method, called based sequencing, ensures that Taiko inherits Ethereum's security and decentralization properties. +- Smart Contracts and Governance: Taiko operates through smart contracts on Ethereum, detailing its protocol. Governance, including protocol updates, is managed by the Taiko DAO, ensuring community-driven decisions. +- Open Source and Compatibility: As an open-source platform, Taiko allows developers to deploy dApps seamlessly, maintaining Ethereum's ease of use and accessibility. +- Decentralized Validation: Taiko supports a decentralized model for proposers and validators, enhancing network security and integrity. Ethereum L1 validators also play a pivotal role, emphasizing decentralization. +- Community-Driven Governance: The Taiko DAO, driven by TKO token holders, oversees significant protocol decisions. This governance model promotes inclusivity and community engagement. + +In essence, Taiko's approach, built on zero knowledge proofs and closely integrated with Ethereum's infrastructure, offers a scalable and secure solution while adhering to Ethereum’s foundational values. Its commitment to open-source development and community governance aligns well with the ethos of the wider Ethereum community. + +### 1.2 Mechanism of Taiko + +Mechanism of action of Taiko +Taiko's operating mechanism is based on the cooperation of three main subjects: + +Proposer: Responsible for creating blocks from user transactions at layer 2 and proposing to Ethereum. +Prover: Create zk-Snark proofs to check the validity of transactions from layer 2, blocks proposed by the Proposer. +Node runner: Executes transactions in the network. Both the proposer and the prover must run a node to fulfill a role in the network. +Taiko's transaction confirmation process takes place as follows: +Users make transactions on layer 2 Taiko. + +Proposer creates block rollup, synthesizes transactions from users at layer 2 and proposes to Ethereum. +Prover creates valid proof, proving the correctness of the block just submitted. +The block will then mark complete on the chain. The block status changes from green to yellow after being validated. + +## 2. Architecture and protocol overview + +![protocol overview](https://github.com/kaveyjoe/Assests/blob/main/Taiko%20Overview.png) + +- block execution is deterministic once the block is appended to the proposed block list in the TaikoL1 contract. Once registered, the protocol ensures that all block properties are immutable. This makes the block execution deterministic: the post-block state can now be calculated by anyone. As such, the block is immediately verified. This also ensures that no one knows more about the latest state than anyone else, which would create an unfair advantage. +- block metadata is validated when the block is proposed. The prover has no impact on how the block is executed and what the post-block state is; +- the proof can be generated after the block is checked for validity and its parent block’s state is known +- as all proposed blocks are deterministic, they can be proven in parallel, because all intermediate states between blocks are known and unique. Once a proof is submitted for the block and its parent block, we call the block on-chain verified. + +**1 . Block proposal** + +- Anyone can run a Taiko sequencer. It monitors the Taiko network mempool for signed and submitted txs. +- The sequencer determines the tx order in the block. +- When a block is built, the proposing sequencer submits a proposeBlock transaction (block = transaction list + metadata) directly to Ethereum through the TaikoL1 contract. There is no consensus among L2 nodes, but there is some networking between L2 nodes (syncing, sharing transactions, etc.) However, the order of Taiko blocks on Ethereum (L1) is determined by the Ethereum node. +- All Taiko nodes connect to Ethereum nodes and subscribe to Ethereum's block events. When a Taiko block proposal is confirmed, the block is appended to a queue on L1 in a TaikoL1 contract. Taiko nodes can then download these blocks and execute valid transactions in each block. Taiko nodes track which L2 blocks are verified by subscribing to another TaikoL1 event on Ethereum. + +**2. Block validation** + +- The block consists of a transaction list (txList) and metadata. The txList of an L2 block will eventually (when EIP-4844 is live) be part of a blob in the L1 Consensus Layer (CL). +- txList is not directly accessible to L1 contracts. Therefore, a ZKP shall prove that the chosen txList is a slice of the given blob data. +- Block validity criteria that all blocks need to respect: K_maxBobSize, K_BlockMaxTxs, K_BlockMaxGasLimit and config.anchorTxGasLimit +- Once the block is proposed, the Taiko client checks if the block is decoded into a list of transactions +- Taiko client validates each enclosed transaction and generates a tracelog for each transaction for the prover to use as witness data. If a tx is invalid, it will be dropped. +- The first transaction in the Taiko L2 block is always an anchoring transaction, which verifies the 256 hashes of the latest blocks, the L2 chain ID and the EIP-1559 base fee + +**3. Block proving** + +- Anyone can run a prover. +- Proof can be prepared if all valid txs have been executed; and the parent block’s state is known. The proof proves the change in the block state. +- The block can be verified once the parent block is verified; and there is a valid ZKP proving the transition from the parent state to the current block’s state. +- only the first proof will be accepted for any given block transition (fork choice). +- The address receiving the reward is coupled with the proof, preventing it from being stolen by other provers. + +**Sequencer design (sequencers are called proposers in Taiko)** + +- Based sequencing/L1-sequencing: as an Ethereum-equivalent rollup, Taiko can reuse Ethereum L1 validators to drive the sequencing of Taiko blocks, inheriting L1 liveness and decentralization. This is also called "based sequencing", or a "based rollup". More info on this: https://ethresear.ch/t/based-rollups-superpowers-from-l1-sequencing/15016 +- Based sequencing inherits the decentralization of L1 and naturally reuses L1 searcher-builder-proposer infrastructure. L1 searchers and block builders are incentivised to extract rollup MEV by including rollup blocks within their L1 bundles and L1 blocks. This then incentivises L1 proposers to include rollup blocks on the L1. + Details: + +- L2 sequencers (proposers) deliver L2 blocks (as bundles) directly to L1 builders (they act like the searchers in the L1 PBS setup). Builders take L2 blocks as regular bundles (similarly as they get L1 bundles from searchers) +- L2 sequencers will earn some MEV (here MEV includes (i) L2 block fees and (ii) MEV from txs reorgs etc.) - this is their motivation to be proposers. In the same manner as on L1, in the chain of searcher >> builder >> proposer, the proposer gets most MEV but searchers still get some share to make profits. It works the same way for L2 sequencers. +- As mentioned anyone can propose a block anytime (there are no time slots on Taiko like on Ethereum the 12-second slots) +- L2 sequencers build blocks and they compete for the most lucrative txs. Multiple blocks are proposed in parallel based on the same L2 mempool. These blocks are sent to the L1 builders as bundles, and it may happen that some transactions are included in multiple bundles proposed by L2 sequencers. +- When the L1 builders choose which L2 block to accept – they run simulations to find the most profitable bundle. If some txs in the L2 block were already taken by another builder and proposed by the Ethereum validator (this means that block already reached finality), then they are not counted in the current bundle anymore but get excluded from it. However the other L2 blocks proposed should still be valuable enough to be selected and included by an L1 builder within negligible time. +- Theoretically it could happen that most of the txs in a proposed L2 block were already included by L1 builders through other L2 blocks, and thus it is not anymore profitable, but this is expected to be a very rare, marginal case. + +**Fee structure** + +L2 tx fee = L2 EIP-1559* base fee + L1 tx fee + prover fee + proposer fee* +![Fee structure](https://github.com/kaveyjoe/Assests/blob/main/L2TXFEE.png) + +L2 EIP-1559 fee = L2 EIP-1559 tip (goes to the proposer) + L2 EIP-1559 base fee (goes to the Taiko DAO). + +Once a proposer has collected enough transactions, most probably including and ordering them with the intent to generate a (maxim) profit, they create a block. + +- Profit means that for the proposer, the sum of transaction fees (L2 tx fees) from the block is larger than L1 tx fee + prover fee + EIP-1559 base fee. + +**Prover economics and prover mechanisms** + +1 . First prover wins and gets rewarded only +One proof should be confirmed for one “window.” A “window” is a period of time in which multiple blocks are proposed. Any prover can submit a proof for any amount of blocks at any time. + +- There is a target reward, x, that is paid to the prover if they confirm the proof exactly at the target window, t = n. If proven earlier, the reward is lower, if later, reward is higher. +- A target reward is defined based on the historical reward values and is adjusted after each window depending on the proof confirmation time + +![Prover economics](https://github.com/kaveyjoe/Assests/blob/main/Prover%20Economics.png) + +- Effects: + - To be efficient within this design, a prover should be able to find an optimal trade-off point between (i) confirming the proof as late as possible (to get the higher reward) and (ii) confirming the proof earlier than all other provers. + - to confirm the proof as early as possible is not an optimal strategy for the prover; confirming all proofs as fast as possible decreases the rewards making it unreasonable for provers (but beneficial for users). + +2 . Staking-based prover design + +one prover is pseudo-randomly chosen for each block from a pool which includes the top 32 provers, and assigns it to a proposed block. This designated prover must then submit a valid proof within a set time window for block verification. If the prover fails to submit the proof on time, the prover’s stake will be slashed. Prover exit is possible anytime, with a withdrawal time of one week. + +- Prover weight W is calculated based on the stake A and expected reward per gas R. This weight reflects probability to be chosen. + +![Staking-based prover design](https://github.com/kaveyjoe/Assests/blob/main/Staking%20Based%20Prover%20Design.png) + +- The current fee per gas F is calculated based on historical values and is supplied by the core protocol. +- Three other parameters unique for each prover; claimed while joining the pool: + + 1. Amount of Taiko’s TTKO tokens to stake A; + 2. The expected reward per gas, R, is limited to (75% – 125%) _ F range. If the R claimed by the prover is below or above this range, R will be automatically fixed at 75% _ F or 125% \* F, respectively; + 3. The compute capacity specified by the prover + + - If selected, the capacity reduces by one, and + - when the capacity hits zero, the prover will no longer be selected. + - When a block is proven (by them or any other prover), the capacity increases by one, up to the max capacity specified by the prover during staking. + +- If fails to prove the block within a specific time window, the prover gets slashed; +- If the prover failed to prove the block or there is no available prover at the moment to be assigned, any prover can jump in and prove the block. Such a block is considered an “open block”; +- If the block was proven, the prover reward is R \* gasUsed. +- the oracle prover cannot prove/verify blocks directly and thus cannot change the chain state. Therefore, a regular prover will need to generate a ZKP to prove the overridden fork choice. + +3. PBS-inspired proposing and proving design + +There are two ways to assign a block to a prover: + +- If you run a Taiko-node as a proposer or prover, your proposer will select your own local prover by default (left side of the below screenshot), and this prover has to provide a bond of 2.5 TKO as assurance for generating the proof +- proposers can also choose any prover from the open prover market. Proposers send a hash of the L2 block’s transaction list to an open market of provers, who offer a price that they’re willing to provide a bond of 2.5 TKO for (right side of the below screenshot); proposers pay their provers off-chain. + +![PBS-inspired proposing](https://github.com/kaveyjoe/Assests/blob/main/PBS-inspired%20proposing.png) + +When an agreement is reached concerning the proving fee for a specific block, the chosen proof service provider is then granting a cryptographic signature to the proposer which serves as a binding commitment to deliver the proof within the agreed-upon timeframe. + +Provers within this off-chain proof market come in two primary forms: Externally Owned Accounts (EOA) and contracts, often referred to as Prover pools. The reward depends on the proof service provider and the agreement. For EOAs and Prover pools that implement the IERC1271 interface, the reward is disbursed in ETH. However, in cases where providers implement the IProver interface, the prover fee can be ETH, any other ERC20 tokens, or even NFTs, based on the negotiated terms. + +![Bonded prover](https://github.com/kaveyjoe/Assests/blob/main/Bonded%20Prover.png) + +In the event of a failure to deliver the proof within the given time, 1/4 of the bond provided, is directed to the actual prover, while the remaining 3/4 are permanently burnt. Conversely, successful and timely proof delivery ensures the return of these tokens to the Prover. + +### How taiko L1 Works?? + +Taiko is a Layer 2 optimistic rollup solution for Ethereum that aims to provide fast and low-cost transactions while maintaining the security guarantees of the Ethereum network. The L1 part of Taiko plays a crucial role in managing the communication between Layer 2 and the Ethereum mainnet (Layer 1) and ensuring the validity of the L2 state. + +**Here is an overview of how Taiko L1 works**: + +- **Sequencer Selection**: The L1 Taiko contract selects a sequencer responsible for processing and ordering L2 transactions. The sequencer is chosen based on the highest total ETH staked, and the contract ensures that only one sequencer is active at any given time. +- **Transaction Relay**: When users submit transactions to Layer 2, they are first sent to the Taiko L1 contract. The L1 contract checks whether the sequencer has been properly initialized and then forwards the transaction to the sequencer. +- **L2 Block Creation**: The sequencer collects and orders transactions into L2 blocks, performs any necessary state updates, and then generates a merkle root. +- **Block Submission**: The sequencer then submits the L2 block to the L1 contract, along with the new merkle root and necessary metadata. The L1 contract checks whether the submitted block is valid and updates its records accordingly. +- **Dispute Resolution**: In case of a dispute about the validity of an L2 block, anyone can call the dispute function in the L1 contract. This initiates a challenge period, during which parties can submit evidence to either support or dispute the block's validity. If a dispute is successfully resolved, the L1 contract updates the state accordingly. + +Overall, the L1 component of Taiko plays a crucial role in managing the L2 sequencer, facilitating communication and state transitions between L1 and L2, and ensuring the overall security of the system. + +### How taiko L2 Works?? + +Taiko's Layer 2 (L2) is an optimistic rollup solution for Ethereum that aims to provide fast and low-cost transactions while maintaining the security guarantees of the Ethereum network. In a nutshell, the L2 solution bundles transactions into batches and processes them off-chain, only posting the bundles and any necessary proofs on-chain to maintain security and maintain a consistent state. + +**Here's an overview of how Taiko's L2 works**: + +- **Transaction Submission**: Users submit transactions to the sequencer, which collects and orders transactions into L2 blocks. +- **State Transition**: The sequencer performs any necessary state updates in accordance with the L2 transactions it receives and the current L2 state. The sequencer generates a merkle root to represent the updated L2 state and submits the block along with the merkle root and other metadata to the L1 contract. +- **State Validation**: The L1 contract validates the submitted L2 block by checking its merkle root against the previous L2 state and evaluating any necessary fraud proofs. If the L1 contract deems the L2 block valid, it updates its records to reflect the new L2 state. +- **Dispute Resolution**: In case of a dispute about the validity of an L2 block, anyone can submit a challenge within a certain time period, during which evidence can be submitted to either support or dispute the block's validity. If a dispute is successfully resolved, the L1 contract updates the state accordingly. +- **Withdrawals**: Users can withdraw their assets from the L2 contract to the L1 contract by submitting a withdraw request to the L2 contract and waiting for a predetermined challenge period to elapse. Once the challenge period has passed, the funds are transferred to the user's L1 address. + +Overall, Taiko L2 offers a fast and cost-effective way to process transactions off-chain and only post the necessary information on-chain to maintain security and consistency. The L2 contract submits blocks to the L1 contract, and the L1 contract is responsible for validating the L2 blocks and maintaining the overall system security. + +## 3. Scope Contracts + +1 . contracts/common/ + +- [common/IAddressManager.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/common/IAddressManager.sol) +- [common/AddressManager.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/common/AddressManager.sol) +- [common/IAddressResolver.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/common/IAddressResolver.sol) +- [common/AddressResolver.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/common/AddressResolver.sol) +- [common/EssentialContract.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/common/EssentialContract.sol) + +2 . contracts/libs/ + +- [libs/Lib4844.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/libs/Lib4844.sol) +- [libs/LibAddress.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/libs/LibAddress.sol) +- [libs/LibMath.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/libs/LibMath.sol) +- [libs/LibTrieProof.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/libs/LibTrieProof.sol) + +3. contracts/L1/ + +- [L1/gov/TaikoGovernor.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/gov/TaikoGovernor.sol) +- [L1/gov/TaikoTimelockController.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/gov/TaikoTimelockController.sol) +- [L1/hooks/IHook.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/hooks/IHook.sol) +- [L1/hooks/AssignmentHook.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/hooks/AssignmentHook.sol) +- [L1/ITaikoL1.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/ITaikoL1.sol) +- [L1/libs/LibDepositing.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/libs/LibDepositing.sol) +- [L1/libs/LibProposing.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/libs/LibProposing.sol) +- [L1/libs/LibProving.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/libs/LibProving.sol) +- [L1/libs/LibUtils.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/libs/LibUtils.sol) +- [L1/libs/LibVerifying.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/libs/LibVerifying.sol) +- [GuardianProver.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/provers/GuardianProver.sol) +- [L1/provers/Guardians.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/provers/Guardians.sol) +- [L1/TaikoData.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/TaikoData.sol) +- [L1/TaikoErrors.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/TaikoErrors.sol) +- [L1/TaikoEvents.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/TaikoEvents.sol) +- [L1/TaikoL1.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/TaikoL1.sol) +- [L1/TaikoToken.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/TaikoToken.sol) +- [L1/tiers/ITierProvider.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/tiers/ITierProvider.sol) +- [L1/tiers/DevnetTierProvider.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/tiers/DevnetTierProvider.sol) +- [L1/tiers/MainnetTierProvider.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/tiers/MainnetTierProvider.sol) +- [L1/tiers/TestnetTierProvider.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/tiers/TestnetTierProvider.sol) + +4. contracts/L2/ + +- [L2/CrossChainOwned.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L2/CrossChainOwned.sol) +- [L2/Lib1559Math.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L2/Lib1559Math.sol) +- [L2/TaikoL2.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L2/TaikoL2.sol) +- [L2/TaikoL2EIP1559Configurable.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L2/TaikoL2EIP1559Configurable.sol) + +5. contracts/signal/ + +- [signal/ISignalService.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/signal/ISignalService.sol) +- [signal/LibSignals.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/signal/LibSignals.sol) +- [signal/SignalService.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/signal/SignalService.sol) + +6. contracts/bridge/ + +- [bridge/IBridge.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/bridge/IBridge.sol) +- [bridge/Bridge.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/bridge/Bridge.sol) + +7. contracts/tokenvault/ + +- [tokenvault/adapters/USDCAdapter.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/adapters/USDCAdapter.sol) +- [tokenvault/BridgedERC20.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BridgedERC20.sol) +- [tokenvault/BridgedERC20Base.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BridgedERC20Base.sol) +- [tokenvault/BridgedERC721.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BridgedERC721.sol) +- [tokenvault/BridgedERC1155.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BridgedERC1155.sol) +- [tokenvault/BaseNFTVault.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BaseNFTVault.sol) +- [tokenvault/BaseVault.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BaseVault.sol) +- [tokenvault/ERC1155Vault.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/ERC1155Vault.sol) +- [tokenvault/ERC20Vault.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/ERC20Vault.sol) +- [tokenvault/ERC721Vault.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/ERC721Vault.sol) +- [tokenvault/IBridgedERC20.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/IBridgedERC20.sol) +- [tokenvault/LibBridgedToken.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/LibBridgedToken.sol) + +8. contracts/thirdparty/ + +- [thirdparty/nomad-xyz/ExcessivelySafeCall.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/nomad-xyz/ExcessivelySafeCall.sol) +- [thirdparty/optimism/Bytes.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/optimism/Bytes.sol) +- [thirdparty/optimism/rlp/RLPReader.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/optimism/rlp/RLPReader.sol) +- [thirdparty/optimism/rlp/RLPWriter.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/optimism/rlp/RLPWriter.sol) +- [thirdparty/optimism/trie/MerkleTrie.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/optimism/trie/MerkleTrie.sol) +- [thirdparty/optimism/trie/SecureMerkleTrie.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/optimism/trie/SecureMerkleTrie.sol) +- [thirdparty/solmate/LibFixedPointMath.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/solmate/LibFixedPointMath.sol) + +9. contracts/verifiers/ + +- [verifiers/IVerifier.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/verifiers/IVerifier.sol) +- [verifiers/GuardianVerifier.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/verifiers/GuardianVerifier.sol) +- [verifiers/SgxVerifier.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/verifiers/SgxVerifier.sol) + +10. contracts/team/ + +- [team/airdrop/ERC20Airdrop.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/team/airdrop/ERC20Airdrop.sol) +- [team/airdrop/ERC20Airdrop2.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/team/airdrop/ERC20Airdrop2.sol) +- [team/airdrop/ERC721Airdrop.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/team/airdrop/ERC721Airdrop.sol) +- [team/airdrop/MerkleClaimable.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/team/airdrop/MerkleClaimable.sol) +- [team/TimelockTokenPool.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/team/TimelockTokenPool.sol) + +11. contracts/automata-attestation/ + +- [automata-attestation/AutomataDcapV3Attestation.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/AutomataDcapV3Attestation.sol) +- [automata-attestation/interfaces/IAttestation.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/interfaces/IAttestation.sol) +- [automata-attestation/interfaces/ISigVerifyLib.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/interfaces/ISigVerifyLib.sol) +- [automata-attestation/lib/EnclaveIdStruct.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/EnclaveIdStruct.sol) +- [automata-attestation/lib/interfaces/IPEMCertChainLib.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/interfaces/IPEMCertChainLib.sol) +- [automata-attestation/lib/PEMCertChainLib.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/PEMCertChainLib.sol) +- [automata-attestation/lib/QuoteV3Auth/V3Parser.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/QuoteV3Auth/V3Parser.sol) +- [automata-attestation/lib/QuoteV3Auth/V3Struct.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/QuoteV3Auth/V3Struct.sol) +- [automata-attestation/lib/TCBInfoStruct.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/TCBInfoStruct.sol) +- [automata-attestation/utils/Asn1Decode.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/Asn1Decode.sol) +- [automata-attestation/utils/BytesUtils.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/BytesUtils.sol) +- [automata-attestation/utils/RsaVerify.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/RsaVerify.sol) +- [automata-attestation/utils/SHA1.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/SHA1.sol) +- [automata-attestation/utils/SigVerifyLib.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/SigVerifyLib.sol) +- [automata-attestation/utils/X509DateUtils.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/X509DateUtils.sol) + +## 4. Codebase Analysis + +### 4.1 Approach Taken reviewing the codebase + +First, by examining the scope of the code, I determined my code review and analysis strategy. +https://code4rena.com/audits/2024-03-taiko#top +My approach to ensure a thorough and comprehensive audit would encompass several steps, combining theoretical understanding, practical testing, and security assessments. Here’s how I would proceed: + +- \***\*Understanding the Taiko Protocol**: I familiarized myself with the Taiko protocol and its components, focusing on the Layer 2 (L2) aspects. L2 solutions provide enhanced scalability and privacy features to the Ethereum blockchain. The Taiko protocol combines several L2 techniques, such as optimistic and zero-knowledge rollups, and validity proof systems. + +- **Exploring the Codebase**: I explored the Taiko smart contract codebase available on GitHub to understand the different components and contract interactions. The codebase mainly consists of the following categories: + + - Core: Core contracts related to the L2 infrastructure, such as TaikoL1, TaikoL2, L1ERC20Bridge, and others. + - Verifiers: Contracts responsible for verifying the validity proofs, such as GuardianVerifier and SgxVerifier. + - Tokens: Token-related contracts, including ERC-20 and ERC-721 bridges. + - Third-party libraries/contracts: Libraries and third-party contracts from OpenZeppelin, Solmate, and others. + - Airdrops, timelocks, and other team-related contracts: Contracts dealing with airdrops, token vesting, and other team-related applications. + +- **Dependency Analysis**: I examined the external dependencies used in the contracts, such as OpenZeppelin and Solmate, ensuring they were up-to-date and compatible with the codebase. + +- **Code Quality Review**: I checked the code for proper formatting, naming conventions, and overall readability. I also ensured that the code followed best practices for secure development, minimizing complexity where possible, and making contract interactions modular and clear. + +- **Security Analysis**: I manually inspected the contracts and used automated tools to identify potential security issues, including: + + - Reentrancy + - Integer overflows/underflows + - Front-running opportunities + - Race conditions + - Denial-of-Service (DoS) attacks + - Privilege escalation + - Visibility issues + +- **Testing**: I reviewed the test coverage and ensured that the tests were comprehensive, testing various scenarios, boundary cases, and potential attack vectors. + +- **Audit Findings and Recommendations**: I reviewed audit reports related to the Taiko protocol to ensure that previously identified issues were addressed. + +### 4.2 Contracts Overview + +1 . [common/IAddressManager.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/common/IAddressManager.sol) +This is an interface defining common functions for managing addresses, such as adding or removing an address from a whitelist or blacklist. + +2. [common/AddressManager.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/common/AddressManager.sol) + This is an implementation of the IAddressManager interface. It manages a set of addresses and maintains separate whitelists and blacklists. The contract has internal functions for adding/removing addresses from both lists, as well as functions for getting the total number of addresses and checking membership on the lists. + +3. [common/IAddressResolver.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/common/IAddressResolver.sol) + This is an interface for a contract that resolves addresses, essentially mapping deployment addresses (i.e., contract or token addresses) to other information that the protocol requires. + +4. [common/AddressResolver.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/common/AddressResolver.sol) + This is an implementation of the IAddressResolver interface. It can resolve the addresses based on the name of the required contract. The contract maintains a mapping between the contract name and the actual deployment address, and exposes functions for adding, updating, and removing contract mappings, as well as resolving the contract address. + +5. [common/EssentialContract.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/common/EssentialContract.sol) + This is a base contract for other protocol contracts to inherit. It ensures that the implementing contract is initialized properly and provides access to essential protocol functionality. The contract defines an interface for a two-step setup process, which includes initialization (performed once at deployment) and activation (performed after deployment). Additionally, the contract includes functions for checking initialization and activation status, as well as a mechanism for upgrading the contract. + +6. [libs/Lib4844.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/libs/Lib4844.sol) + This library provides helper functions for interacting with the 4844 network: an optimistic rollup network built on top of the Ethereum blockchain. The library includes methods for calculating the storage root, adding logger, and constructing and validating transaction proofs. These utility functions simplify 4844-related logic in the main Taiko protocol contracts, making it easier to perform tasks that involve the 4844 network, such as fetching and validating transaction proofs from the rollup network. + +7. [libs/LibAddress.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/libs/LibAddress.sol) + This library provides functions for handling Ethereum addresses. It includes several helper functions to deal with ENS names, checking if an address is a contract, and performing common address operations like sending and approving tokens. This library helps keep address-related functions reusable, simplified, and consistent across the entire protocol. + +8. [libs/LibMath.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/libs/LibMath.sol) + This library provides various mathematical operations, particularly related to fixed-point numbers and division. It includes functions for safe division, fractional multiplication, and other useful arithmetic operations that are required throughout the Taiko protocol. + +9. [libs/LibTrieProof.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/libs/LibTrieProof.sol) + This library is specifically designed for Merkle Trie proof functions, which are essential when working with Ethereum's state trie. This library provides functions to create and validate merkle paths as well as perform range proofs. The functions can be used to efficiently check the state root stored in 4844 blocks and entries in associated Merkle Tries. + +10. [L1/gov/TaikoGovernor.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/gov/TaikoGovernor.sol) + This contract is the governance contract for the Taiko protocol on L1. It allows for the creation and management of proposals, as well as the ability to queue and execute actions. It inherits from TaikoTimelockController.sol, which provides a timelock mechanism for actions being executed. + +11. [L1/gov/TaikoTimelockController.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/gov/TaikoTimelockController.sol) + This contract is responsible for implementing a timelock mechanism for the Taiko protocol on L1. It allows for actions to be queued and then executed after a specified delay. It also provides functionality for cancelling queued actions. + +12. [L1/hooks/IHook.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/hooks/IHook.sol) + This contract is an interface for hooks, which are contracts that can be called before or after certain actions in the Taiko protocol. + +13. [L1/hooks/AssignmentHook.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/hooks/AssignmentHook.sol) + This contract is an implementation of the IHook interface and is used to handle the assignment of roles and permissions in the Taiko protocol. + +14. [L1/ITaikoL1.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/ITaikoL1.sol) + This contract is an interface for the Taiko L1 contract, which is the main contract for the Taiko protocol on L1. It includes functionality for creating and managing proposals, as well as handling deposits and withdrawals. + +15. [L1/libs/LibDepositing.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/libs/LibDepositing.sol) + This contract contains library functions for handling deposits in the Taiko protocol. It includes functions for calculating the correct deposit amount, as well as handling the actual deposit of funds. + +16. [L1/libs/LibProposing.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/libs/LibProposing.sol) + This contract contains library functions for handling proposals in the Taiko protocol. It includes functions for calculating the number of votes needed to pass a proposal, as well as functions for handling the execution of proposals. + +17. [L1/libs/LibProving.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/libs/LibProving.sol) + This contract contains library functions for proof generation and verification in the Taiko protocol. + +18. [L1/libs/LibUtils.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/libs/LibUtils.sol) + This contract contains library functions for various utility functions used throughout the Taiko protocol. + +19. [L1/libs/LibVerifying.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/libs/LibVerifying.sol) + This contract contains library functions for verifying signatures and messages in the Taiko protocol. + +20. [GuardianProver.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/provers/GuardianProver.sol) + This contract is responsible for generating proofs required for certain actions in the Taiko protocol. It uses the Guardians.sol contract to generate these proofs. + +21. [L1/provers/Guardians.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/provers/Guardians.sol) + This contract manages a list of guardians who are responsible for generating proofs required for certain actions in the Taiko protocol. + +22. [L1/TaikoData.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/TaikoData.sol) + This contract contains various data structures used throughout the Taiko protocol. + +23. [L1/TaikoErrors.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/TaikoErrors.sol) + This contract contains custom errors used throughout the Taiko protocol. + +24. [L1/TaikoEvents.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/TaikoEvents.sol) + This contract contains event definitions used throughout the Taiko protocol. + +25. [L1/TaikoL1.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/TaikoL1.sol) + This contract is the main contract for the Taiko protocol on L1 and is responsible for managing proposals, handling deposits and withdrawals, and interfacing with the TaikoTimelockController.sol contract. + +26. [L1/TaikoToken.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/TaikoToken.sol) + This contract is an ERC20 token used for voting in the Taiko protocol. + +27. [L1/tiers/ITierProvider.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/tiers/ITierProvider.sol) + This contract is an interface for tier providers, which are contracts that provide information about the current tier of a given address. + +28. [L1/tiers/DevnetTierProvider.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/tiers/DevnetTierProvider.sol) + This contract is an implementation of the ITierProvider interface for the devnet environment. + +29. [L1/tiers/MainnetTierProvider.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/tiers/MainnetTierProvider.sol) + This contract is an implementation of the ITierProvider interface for the mainnet environment. + +30. [L1/tiers/TestnetTierProvider.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L1/tiers/TestnetTierProvider.sol) + This contract is an implementation of the ITierProvider interface for the testnet environment. + +31. [L2/CrossChainOwned.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L2/CrossChainOwned.sol) + This contract is an implementation of the Owned pattern, where the contract owner can transfer ownership to another address. It also includes a function to force a contract upgrade by specifying the address of the new implementation. + +32. [L2/Lib1559Math.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L2/Lib1559Math.sol) + This library contains mathematical functions related to Ethereum's EIP-1559 upgrade. It includes functions to calculate the base fee, maximum base fee per gas, and gas tip cap. + +33. [L2/TaikoL2.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L2/TaikoL2.sol) + This contract is the main L2 contract responsible for handling transactions, storing the state root, and interacting with the L1 contract via the bridge. It includes functionalities for transaction submission, state transition, and state proof verification. + +34. [L2/TaikoL2EIP1559Configurable.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/L2/TaikoL2EIP1559Configurable.sol) + This contract is similar to TaikoL2 but is EIP-1559 compatible. It includes functions to set the base fee, gas tip cap, and other related parameters. + +35. [signal/ISignalService.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/signal/ISignalService.sol) + This is an interface contract for the SignalService. It provides function declarations for emitting and canceling signals. + +36. [signal/LibSignals.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/signal/LibSignals.sol) + This library contract contains functions for creating and managing signals. It includes functions for creating signals, canceling signals, and checking the status of signals. + +37. [signal/SignalService.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/signal/SignalService.sol) + This contract is the main SignalService implementation. It enables users to create and cancel signals, while also tracking the status and expiry of signals. + +38. [bridge/IBridge.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/bridge/IBridge.sol) + This is an interface contract for the Bridge. It contains function declarations for L1-L2 transaction handling and state syncing. + +39. [bridge/Bridge.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/bridge/Bridge.sol) + This contract is the main Bridge implementation. It facilitates the transfer of messages between L1 and L2, ensuring the atomicity and consistency of the state between the two layers. Additionally, it includes functionalities for handling cross-layer transactions, applying penalties for invalid transactions, and syncing L1 and L2 states. + +40. [tokenvault/adapters/USDCAdapter.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/adapters/USDCAdapter.sol) + This contract is an adapter for the USDC token. It inherits from IBridgedERC20, which is an interface for bridged ERC20 tokens. The contract includes two functions: name and symbol, which return the name and symbol of the USDC token. + +41. [tokenvault/BridgedERC20.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BridgedERC20.sol): + This contract is an implementation of the IBridgedERC20 interface. It is a bridged version of the ERC20 standard that allows for transferring tokens between different blockchain networks. The contract includes functionality for transferring tokens, approving other contracts to transfer tokens, and getting the allowance that an owner has granted to a spender. + +42. [tokenvault/BridgedERC20Base.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BridgedERC20Base.sol) + This contract is the base contract for BridgedERC20. It includes the basic functionality for bridged tokens, such as transferring tokens, approving other contracts to transfer tokens, and getting allowances. + +43. [tokenvault/BridgedERC721.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BridgedERC721.sol) + This contract is an implementation of the ERC721 standard for non-fungible tokens (NFTs) that allows for transferring NFTs between different blockchain networks. The contract includes functionality for transferring NFTs, approving other contracts to transfer NFTs, and getting the approval status for a given NFT. + +44. [tokenvault/BridgedERC1155.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BridgedERC1155.sol) + This contract is an implementation of the ERC1155 standard for multi-token contracts that allows for transferring multiple tokens between different blockchain networks. The contract includes functionality for transferring tokens, approving other contracts to transfer tokens, and getting allowances for multiple tokens. + +45. [tokenvault/BaseNFTVault.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BaseNFTVault.sol) + This contract is a base contract for NFT vaults. It includes basic functionality for NFT vaults, such as storing NFTs and transferring them out of the vault. + +46. [tokenvault/BaseVault.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/BaseVault.sol) + This contract is a base contract for token vaults. It includes basic functionality for token vaults, such as storing tokens and transferring them out of the vault. + +47. [tokenvault/ERC1155Vault.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/ERC1155Vault.sol) + This contract is a vault for ERC1155 tokens that allows for transferring multiple tokens between different blockchain networks. It inherits from BridgedERC1155, which implements the ERC1155 standard. + +48. [tokenvault/ERC20Vault.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/ERC20Vault.sol) + This contract is a vault for ERC20 tokens that allows for transferring tokens between different blockchain networks. It inherits from BridgedERC20Base. + +49. [tokenvault/ERC721Vault.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/ERC721Vault.sol) + This contract is a vault for ERC721 tokens that allows for transferring NFTs between different blockchain networks. It inherits from BridgedERC721. + +50. [tokenvault/IBridgedERC20.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/IBridgedERC20.sol) + This contract is an interface for bridged ERC20 tokens. It includes the basic functionality for transferring tokens, approving other contracts to transfer tokens, and getting allowances. + +51. [tokenvault/LibBridgedToken.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/tokenvault/LibBridgedToken.sol) + This contract is a library for BridgedERC20, BridgedERC721, and BridgedERC1155. It includes common functionality for bridged tokens, such as managing metadata. + +52. [thirdparty/nomad-xyz/ExcessivelySafeCall.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/nomad-xyz/ExcessivelySafeCall.sol) + This contract is a simple library that provides a safe way to call external contracts without worrying about reentrancy attacks. It uses a pattern called the "Reentrancy Guard" to ensure that a contract can only be called once within a given execution context. This is useful for situations where a contract needs to make an external call that could potentially modify its state. + +53. [thirdparty/optimism/Bytes.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/optimism/Bytes.sol) + This contract is a simple library that provides a number of utility functions for working with byte arrays in Solidity. It includes functions for checking the length of a byte array, slicing a byte array, and concatenating multiple byte arrays together. + +54. [thirdparty/optimism/rlp/RLPReader.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/optimism/rlp/RLPReader.sol) + This contract is a library that provides functions for parsing Recursive Length Prefix (RLP) encoded data. RLP is a binary data format used in Ethereum to encode structured data. This library provides functions for decoding RLP-encoded data into Solidity data types, such as integers, byte arrays, and arrays of other data types. + +55. [thirdparty/optimism/rlp/RLPWriter.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/optimism/rlp/RLPWriter.sol) + This contract is a library that provides functions for encoding data into Recursive Length Prefix (RLP) format. It can be used to encode Solidity data types, such as integers, byte arrays, and arrays of other data types, into RLP format. + +56. [thirdparty/optimism/trie/MerkleTrie.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/optimism/trie/MerkleTrie.sol) + This contract is a library that provides an implementation of a Merkle tree. A Merkle tree is a binary tree data structure that allows for efficient and secure verification of large datasets. This library provides functions for creating a Merkle tree, adding data to the tree, and verifying the integrity of the tree. + +57. [thirdparty/optimism/trie/SecureMerkleTrie.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/optimism/trie/SecureMerkleTrie.sol) + This contract is a library that provides a secure implementation of a Merkle tree. It is similar to the MerkleTrie library, but includes additional security measures to prevent against attacks such as hash collisions. + +58. [thirdparty/solmate/LibFixedPointMath.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/thirdparty/solmate/LibFixedPointMath.sol) + This contract is a library that provides functions for performing arithmetic operations with fixed-point numbers. Fixed-point numbers are a way of representing decimal values in a binary format, and are commonly used in blockchain applications for representing values such as token balances. This library provides functions for adding, subtracting, multiplying, and dividing fixed-point numbers. + +59. [verifiers/IVerifier.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/verifiers/IVerifier.sol) + This contract is an interface for verifiers. It defines the functions that a verifier contract must implement. + +60. [verifiers/GuardianVerifier.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/verifiers/GuardianVerifier.sol) + This contract is a verifier that uses a "guardian" contract to verify the correctness of transactions. The guardian contract is responsible for checking the state of the Taiko protocol and ensuring that transactions are valid. + +61. [verifiers/SgxVerifier.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/verifiers/SgxVerifier.sol) + This contract is a verifier that uses Intel Software Guard Extensions (SGX) to verify the correctness of transactions. SGX is a hardware-based technology that allows for secure execution of code in an enclave environment. This verifier uses SGX to ensure that transactions are not tampered with. + +62. [team/airdrop/ERC20Airdrop.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/team/airdrop/ERC20Airdrop.sol) + This contract is used for distributing a fixed number of tokens to a list of recipients. It is an implementation of the ERC20 token standard. + +63. [team/airdrop/ERC20Airdrop2.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/team/airdrop/ERC20Airdrop2.sol) + This contract is similar to ERC20Airdrop, but allows for the possibility of distributing additional tokens in the future. + +64. [team/airdrop/ERC721Airdrop.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/team/airdrop/ERC721Airdrop.sol) + This contract is used for distributing a fixed number of non-fungible tokens to a list of recipients. It is an implementation of the ERC721 token standard. + +65. [team/airdrop/MerkleClaimable.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/team/airdrop/MerkleClaimable.sol) + This contract is a library that provides functions for generating and verifying Merkle proofs. It can be used to allow users to claim tokens or other assets by proving that they are entitled to them. + +66. [team/TimelockTokenPool.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/team/TimelockTokenPool.sol) + This contract is used for holding a pool of tokens that are subject to a time lock. This can be useful for distributing tokens to a team or community over a period of time. + +67. automata-attestation/AutomataDcapV3Attestation.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/AutomataDcapV3Attestation.sol) + This contract is the main contract in the automata-attestation directory. It is responsible for verifying attestation Quote V3 from Intel SGX enclaves. The contract uses several libraries and interfaces to perform the verification, including IAttestation, ISigVerifyLib, IPEMCertChainLib, and QuoteV3Auth. + +68. [automata-attestation/interfaces/IAttestation.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/interfaces/IAttestation.sol) + This is an interface contract that defines the required functions for attestation. It includes functions for getting the quote from an enclave and verifying the quote. + +69. [automata-attestation/interfaces/ISigVerifyLib.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/interfaces/ISigVerifyLib.sol) + This is an interface contract that defines the required functions for signature verification. It includes functions for verifying ECDSA and RSA signatures. + +70. [automata-attestation/lib/EnclaveIdStruct.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/EnclaveIdStruct.sol) + This contract defines a struct for storing enclave ID information. + +71. [automata-attestation/lib/interfaces/IPEMCertChainLib.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/interfaces/IPEMCertChainLib.sol) + This is an interface contract that defines the required functions for working with a chain of Platform Error Management Certificates (PEMCertChain). It includes functions for getting the root certificate and verifying the chain. + +72. [automata-attestation/lib/PEMCertChainLib.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/PEMCertChainLib.sol) + This contract implements the IPEMCertChainLib interface and provides functionality for working with a chain of PEMCertificates. + +73. [automata-attestation/lib/QuoteV3Auth/V3Parser.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/QuoteV3Auth/V3Parser.sol) + This contract is a library contract that provides functionality for parsing Quote V3 from Intel SGX enclaves. + +74. [automata-attestation/lib/QuoteV3Auth/V3Struct.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/QuoteV3Auth/V3Struct.sol) + This contract defines a struct for storing Quote V3 information. + +75. [automata-attestation/lib/TCBInfoStruct.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/lib/TCBInfoStruct.sol) + This contract defines a struct for storing Trusted Computing Base (TCB) information. + +76. [automata-attestation/utils/Asn1Decode.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/Asn1Decode.sol) + This contract is a library contract that provides functionality for decoding ASN.1 encoded data. + +77. [automata-attestation/utils/BytesUtils.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/BytesUtils.sol) + This contract is a library contract that provides functionality for working with bytes, including concatenating, slicing, and checking lengths. + +78. [automata-attestation/utils/RsaVerify.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/RsaVerify.sol) + This contract is a library contract that provides functionality for verifying RSA signatures. + +79. [automata-attestation/utils/SHA1.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/SHA1.sol)This contract is a library contract that provides SHA-1 hashing functionality. + +80. [automata-attestation/utils/SigVerifyLib.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/SigVerifyLib.sol) + This contract is a library contract that provides signature verification functionality, including ECDSA and RSA. + +81. [automata-attestation/utils/X509DateUtils.sol](https://github.com/code-423n4/2024-03-taiko/blob/main/packages/protocol/contracts/automata-attestation/utils/X509DateUtils.sol) + This contract is a library contract that provides functionality for working with X.509 dates, including parsing and comparing. + +### 4.3 Codebase Quality Analysis + +| Aspect | Description | +| ----------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | +| Architecture and Design | | +| Upgradeability | The contracts/L1/gov/TaikoGovernor.sol and contracts/L1/gov/TaikoTimelockController.sol contracts have a version variable that allows for upgrades. The rest of the contracts do not have upgradeability features. | +| Modularity | The codebase is divided into several directories, each containing related contracts. This modular structure helps to organize the code and makes it easier to navigate. | +| Testability | The contracts/L1/TaikoData.sol contract provides a getTestData() function that returns test data for use in testing. This is a good practice for making code more testable. | +| Security | | +| Authorization | The contracts/L1/gov/TaikoGovernor.sol contract uses role-based access control to restrict certain functions to specific addresses. This is a good practice for preventing unauthorized access. | +| Input Validation | The contracts/L1/libs/LibMath.sol contract provides functions for validating input values, such as isUint and isAddr. These functions should be used throughout the codebase to ensure that inputs are valid before being processed. | +| Auditability | | +| Comments | Comments are used throughout the codebase to explain the code and provide additional information. This is a good practice for making code more readable and understandable. | +| Naming Conventions | Consistent naming conventions are used throughout the codebase. This helps to quickly identify and understand the code. | +| Code Complexity | The codebase has a mix of simple and complex functions. Simple functions are generally easier to understand and audit, while complex functions can be more difficult to follow. | +| Error Handling | The contracts/L1/TaikoErrors.sol contract provides a standardized way of handling errors throughout the codebase. This is a good practice for ensuring that errors are handled consistently and that the code remains readable. | +| Documentation | | +| Codebase Overview | A high-level overview of the codebase would be helpful for quickly understanding the structure and organization of the code. This could include a diagram or chart showing the relationships between the different contracts and directories. | +| Contract Documentation | Each contract should have detailed documentation that explains its purpose, functionality, and any relevant variables or functions. This documentation should be easily accessible from the code itself, either through comments or separate documentation files. | +| Function Documentation | Each function should have detailed documentation that explains its purpose, functionality, and any relevant input and output parameters. This documentation should be easily accessible from the code itself, either through comments or separate documentation files. | +| Global Variables | Global variables that are used throughout the codebase should be documented in a central location. This helps to ensure that they are used consistently and that their purpose is clear. | +| Security Best Practices | The codebase should follow well-established security best practices, such as using secure coding practices and performing regular security audits. This helps to ensure that the code remains secure and up-to-date with the latest threats and vulnerabilities. | + +## 4.5 Contracts Workflow + +| Contracts | Category | Core Functionality | Technical Details | +| ------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | ----------------------------------------------------- | ------------------------------------------------------------------------------------------------ | +| IAddressResolver, AddressResolver | Common | Address resolution for L1 and L2 contracts | Uses a trie data structure to efficiently store and retrieve addresses | +| IHook, AssignmentHook | L1 Hooks | Allows L1 contracts to be notified of specific events | Provides a flexible system for triggering callbacks from L1 contracts | +| ITaikoL1 | L1 Contracts | Main L1 contract that orchestrates L1 operations | Contains logic for L1 deposits, proposals, proving, and verifying | +| LibDepositing, LibProposing, LibProving, LibUtils, LibVerifying | L1 Libraries | Various utility functions for L1 contracts | Provides functionality for deposit calculations, proposing, proving, and verifying | +| GuardianProver, Guardians | L1 Provers | Manages secure enclaves for proof verification | Provides an interface for secure enclave communication and verification | +| TaikoData, TaikoErrors, TaikoEvents, TaikoL1, TaikoToken | L1 Contracts | Core L1 contracts for Taiko | Contains logic for L1 errors, events, and token management | +| IBridge, Bridge | Bridge | Manages L1 to L2 token transfers | Provides an interface for L1 to L2 token bridging | +| IVerifier, GuardianVerifier, SgxVerifier | Verifiers | Verifies L2 state transitions | Provides an interface for verifying L2 state transitions using Secure Enclaves or SGX technology | +| CrossChainOwned | L2 Contracts | Provides cross-chain ownership management | Facilitates cross-chain contract interaction and ownership management | +| Lib1559Math, TaikoL2, TaikoL2EIP1559Configurable, TaikoL1, TaikoL2, TaikoEvents | L2 Contracts | Core L2 contracts for Taiko | Contains logic for L2 token management, transactions, and events | +| ISignalService, LibSignals, SignalService | Signal Service | Manages signal services for Taiko | Provides an interface for various signal services and library functions | +| USDCAdapter | Token Vaults | Manages the USDC token vault | Provides functionality for depositing and withdrawing USDC tokens | +| BridgedERC20, BridgedERC20Base, BridgedERC721, BridgedERC1155, BaseNFTVault, BaseVault, ERC1155Vault, ERC20Vault, ERC721Vault, IBridgedERC20, LibBridgedToken | Token Vaults | Various token vault and adapter contracts | Provides functionality for depositing and withdrawing various ERC token standards | +| ExcessivelySafeCall, Bytes, RLPReader, RLPWriter, MerkleTrie, SecureMerkleTrie, LibFixedPointMath | Third Party Contracts and Libraries | Various contracts and libraries from third parties | Provides various functionality for third party contracts and libraries | +| IVerifier | Verifiers | Verifies L2 state transitions | Provides an interface for verifying L2 state transitions using Secure Enclaves or SGX technology | + +## 5. Economic Model Analysis + +| Variable Name | Description | Economic Impact | +| ----------------- | --------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | +| depositFee | Fee charged for depositing assets. | Determines the revenue generated by the protocol for handling deposits. High deposit fees encourage more protocol revenue but may discourage users from depositing. | +| withdrawalFee | Fee charged for withdrawing assets. | Determines the revenue generated by the protocol for handling withdrawals. High withdrawal fees may discourage users from withdrawing. | +| crossChainFee | Fee charged for cross-chain transactions. | Determines the revenue generated by the protocol for facilitating cross-chain transactions. High cross-chain fees may discourage users from using the cross-chain feature. | +| proposerFee | Fee charged for proposing blocks. | Determines the revenue generated by the protocol for handling block proposals. High proposer fees may discourage users from proposing blocks. | +| guardianFee | Fee charged for verifying blocks. | Determines the revenue generated by the protocol for handling block verifications. High guardian fees may discourage users from verifying blocks. | +| L1GasPrice | Gas price on the L1 chain. | Determines the cost of executing transactions and smart contracts on the L1 chain. High gas prices may discourage users from using the L1 chain. | +| L2GasPrice | Gas price on the L2 chain. | Determines the cost of executing transactions and smart contracts on the L2 chain. High gas prices may discourage users from using the L2 chain. | +| rewardsPerBlock | Rewards distributed per block. | Determines the incentives for users to participate in the protocol, such as proposing and verifying blocks. High rewards encourage more participation but may reduce overall revenue. | +| tokenEmissionRate | Rate at which new tokens are generated. | Determines the inflation rate of the token and the dilution of existing token holders. High emission rates lead to rapid inflation and token dilution. | +| minimumDeposit | Minimum deposit amount. | Determines the minimum amount required for users to participate in the protocol. Low minimum deposits encourage more participation, but may also reduce overall security. | +| maximumDeposit | Maximum deposit amount. | Determines the maximum amount that users can deposit in the protocol. High maximum deposits may increase overall security but may also pose a risk to the system if not properly managed. | +| minimumWithdrawal | Minimum withdrawal amount. | Determines the minimum amount required for users to withdraw their assets. Low minimum withdrawals encourage more participation but may also increase transaction costs. | +| maximumWithdrawal | Maximum withdrawal amount. | Determines the maximum amount that users can withdraw from the protocol. High maximum withdrawals may increase overall security but may also pose a risk to the system if not properly managed. | +| tierProvider | Contract responsible for providing tier information. | Determines the economic incentives and penalties for different user tiers. Influences the overall security of the system. | +| airdrop | Contract responsible for distributing tokens as airdrops. | Determines the distribution of tokens to users and may impact the token's value. | +| teamPool | Contract responsible for managing the team's token pool. | Determines the distribution and allocation of tokens to the team members and may impact the token's value. | +| verifier | Contract responsible for verifying block attestations. | Determines the security and integrity of the system. High-quality verifiers can increase overall system security. | + +## 6. Architecture Business Logic + +| Component | Functionality | Interactions | +| ------------------------ | --------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | +| L1 Contracts | L1 bridge functionality, L1 token handling, L1 cross-chain messages, L1 data handling, and L1 governance. | L1 <-> L2 bridge contracts, L1 bridge helpers, L1 governance contracts, L1 token contracts, L1 ERC20 token wrappers, L1 ERC721 token wrappers, and L1 ERC1155 token wrappers. | +| L2 Contracts | L2 bridge functionality, L2 token handling, L2 cross-chain messages, L2 data handling, and L2 verifiers. | L1 <-> L2 bridge contracts, L2 cross-chain message queue, L2 ERC20 token wrappers, L2 ERC721 token wrappers, L2 ERC1155 token wrappers, and L2 verifier contracts. | +| Bridge Contracts | Bi-directional message passing, token transfers, and token wrappers between L1 and L2. | L1 <-> L2 bridge contracts, L1 token contracts, and L2 token contracts. | +| Helper Contracts | Assist L1 and L2 contracts with various tasks, such as deposits, withdrawals, and message handling. | L1 <-> L2 bridge contracts, and L1 and L2 token contracts. | +| Governance Contracts | Allow for managing parameters and upgrades for the Taiko protocol. | L1 <-> L2 bridge contracts and helper contracts. | +| Token Contracts | Native tokens for L1 and L2. | L1 and L2 token contracts, L1 and L2 bridge contracts, and L1 and L2 ERC20, ERC721, and ERC1155 token wrappers. | +| Verifier Contracts | Handle L1 and L2 verification tasks. | Bridge contracts, L1 and L2 token contracts, and L1 and L2 ERC20, ERC721, and ERC1155 token wrappers. | +| Token Vault Contracts | Interact with L1 and L2 tokens for deposit/withdrawal, transfer, and cross-chain messages. | Bridge contracts, L1 <-> L2 bridge contracts, and L1 and L2 token contracts. | +| Signal Service Contracts | Process L1 and L2 contract signals. | Bridge contracts, L1 token contracts, L2 token contracts, and governance contracts. | +| Third-Party Libraries | Reusable libraries for various tasks, such as RLP encoding and decoding. | Multiple contracts throughout the Taiko protocol. | + +## 7. Representation of Risk Model + +### 7.1 Centralization & Systematic Risks + +- Centralized management of trusted parties, including Guardians, Verifiers, and Tier Providers. +- Guardians have significant control and potential influence over the system's consensus, introducing the risk of centralization. Guardians may collude, censor transactions, or manipulate the system for personal gain. A transparent and fair guardian selection process, as well as frequent evaluations and updates, can help mitigate these risks. +- Tier Providers are responsible for managing the transaction fees and auxiliary gas costs, which can lead to centralization risks if these providers collude, manipulate, or censor transactions. Transparency in their selection process and regular evaluations can help mitigate these risks. +- Taiko currently uses two verifier contracts - GuardianVerifier and SgxVerifier. However, any vulnerabilities found in these contracts may impact the entire system's security. Ensuring a robust and secure design and conducting regular audits can help minimize these risks. +- The bridge between the L1 and L2 chains is a single trust boundary and is responsible for securing and maintaining communication between the two chains. This centralized communication line can lead to single-point failures, censorship, or manipulation of transactions. Prioritizing bridge security, resilience, and regular audits can help reduce these risks. +- Bridge.sol contains critical functionality such as token deposits and withdrawals. Centralizing this functionality in a single contract can have systemic implications if vulnerabilities are found in this contract. Consider distributing this functionality across multiple contracts to reduce potential exposure and risk. +- BaseNFTVault.sol and its derived contracts manage NFT tokens, which can be centralized and expose the system to failures, censorship, or manipulation by a single or a group of vault owners. Implementing decentralized measures, such as vault rotation or owner switching, can help reduce these risks. +- Taiko relies on third-party libraries like OpenZeppelin, optimism, and solmate, introducing potential systemic risks. If vulnerabilities are discovered in these libraries, they can affect multiple contracts within the Taiko ecosystem. Ensuring timely updates and audits of these libraries can help minimize these risks. +- Centralized control over various token contracts can introduce systemic risks, especially if these tokens are fungible and widely adopted. Specifying clear guidelines for token implementations, audits, and periodic reviews can help maintain a robust and secure environment. +- TokenVault and Bridge handle critical aspects of token transfers, deposits, and withdrawals between L1 and L2 chains. Centralizing these functionalities may introduce vulnerabilities, manipulations, or failures. Decentralizing these contracts or distributing their responsibilities can help mitigate systemic risks. + +### 7.2 Technical Risks + +- The TaikoL1 contract's deposit function uses \_checkProofAndUpdateState function, which is vulnerable to denial-of-service attacks if the proof is invalid. +- The CrossChainOwned contract's execute function uses \_checkProofAndUpdateState, introducing the same risk as the TaikoL1 contract. +- The TaikoL2 contract's deposit function and TaikoL2EIP1559Configurable contract's deposit function use \_checkProofAndUpdateState, introducing the same risk as the TaikoL1 contract. +- The TaikoErrors contract's fail function uses revert, which consumes gas and introduces the possibility of transaction failure. +- The ApprovalHook contract's execute function uses \_checkProofAndUpdateState function, which, if the proof is invalid, can result in denial-of-service attacks. +- The AssignmentHook contract uses \_checkProofAndUpdateState function, introducing the same risk as in the ApprovalHook contract. +- The RoundEndHook contract uses \_checkProofAndUpdateState function, introducing the same risk as in the ApprovalHook contract. +- Some of the contracts make use of external libraries, such as solmate, optimism, and nomad-xyz. These libraries have not been audited and could contain vulnerabilities that could be exploited to compromise the system. +- The USDCAdapter contract uses transferFrom to move funds, but does not check the return value. This could allow malicious actors to execute a reentrancy attack. +- The GuardianProver contract uses the push opcode to execute a call to TaikoL1. However, there is no check to ensure that the call succeeded. This could allow malicious actors to execute a denial-of-service (DoS) attack. +- The BaseVault contract has a nonce variable that is used to ensure that funds can only be withdrawn by calling the correct function. However, this variable is not reset after withdrawal. This could allow malicious actors to repeatedly call the withdraw function and drain the vault of its funds. +- The SgxVerifier contract assumes that the hardware implementation of the remote attestation process cannot be tampered with. However, this assumption may not be valid and could allow malicious actors to submit false or malicious attestations that are accepted by the system. +- The DevnetTierProvider contract uses a fixed list of addresses to determine the validity of proofs. This could allow malicious actors to submit false or invalid proofs that are accepted by the system. + +### 7.3 Weak Spots + +- The TaikoL1, CrossChainOwned, TaikoL2, and TaikoL2EIP1559Configurable contracts do not properly validate input parameters, allowing for potential vulnerabilities. +- The TaikoData contract and various libraries contain complex logic, which may lead to potential security risks and vulnerabilities. +- Dependencies on third-party code, such as nomad-xyz/ExcessivelySafeCall, optimism/Bytes, optimism/rlp/RLPReader.sol, optimism/rlp/RLPWriter.sol, optimism/trie/MerkleTrie.sol, optimism/trie/SecureMerkleTrie.sol, and solmate/LibFixedPointMath.sol, introduce potential security risks, as their behavior is influenced by their implementers. +- The TaikoL1, CrossChainOwned, TaikoL2, and TaikoL2EIP1559Configurable contracts implement complex logic in \_checkProofAndUpdateState functions, introducing potential vulnerabilities and security risks. +- The TaikoL1 contract's deposit function does not properly check the input proof length, introducing potential vulnerabilities. +- The TaikoL2EIP1559Configurable contract does not validate input parameters, introducing potential security risks. +- The USDCAdapter contract has a typo in its implementation storage variable, which may lead to errors and potential security risks. +- The BridgedERC20Base contract relies on count and length to iterate over mappings, which may lead to incorrect results or potential security risks. + +## 7.4 Economic Risks + +- The TaikoEvents contract contains an Exit event that can be triggered when a contract errors out. However, the documentation does not make it clear how this event could be used or what its implications are. If this event is used to exit a contract prematurely, it could result in a loss of funds for users. +- The TaikoL2EIP1559Configurable contract has a gasPriceLimit function that can be used to set the maximum gas price for transactions. However, this function does not check that the new gas price is higher than the current price. This could allow malicious actors to set the gas price to a very low value, effectively allowing them to execute transactions at a much lower cost than other users. +- The TaikoL2 contract has a migrate function that can be used to migrate funds from one contract to another. However, this function does not check that the destination contract is valid. This could allow malicious actors to migrate funds to a malicious contract, resulting in a loss of funds for users. +- The TaikoL1 contract has a init function that can be used to initialize the contract. However, this function does not check that the contract has sufficient funds to execute its operations. This could allow malicious actors to execute a denial-of-service (DoS) attack by repeatedly calling the init function with low-cost transactions that consume all of the contract's gas. +- The TaikoL1 contract also has a execute function that can be used to execute arbitrary commands on the contract. This function does not check that the contract has sufficient funds to execute the command, nor does it check that the command is valid. This could allow malicious actors to execute arbitrary code on the contract, potentially resulting in a loss of funds for users. + +## 8. Architecture Recommendations + +- Diversify the set of trusted parties that are responsible for performing critical tasks such as proving and verifying proofs. +- Use a more robust mechanism for error handling, such as reverting the contract or logging an error message, instead of relying on hardcoded error messages. +- Implement proper input validation and error handling in all contract functions to prevent reentrancy, denial-of-service (DoS), and other attacks. +- Use a more robust mechanism for storing and retrieving attestation data, such as a public blockchain, to ensure that data is tamper-evident and auditable. +- Consider implementing multi-party computation techniques, such as threshold signing, to decentralize the responsibility for executing critical tasks. +- Perform thorough security testing and auditing of all contracts and external libraries to identify and fix any vulnerabilities. +- Implement rate-limiting and gas limits on critical functions to prevent abuse and denial-of-service (DoS) attacks. +- Implement proper input validation and error handling in all contract functions to prevent reentrancy, denial-of-service (DoS), and other attacks. +- Consider implementing a more robust mechanism for handling contract errors, such as reverting the contract or logging an error message, instead of relying on a single Exit event. +- Consider implementing a more robust mechanism for configuring gas limits on transactions, such as using a separate contract or smart contract wallet. +- Implement proper input validation and error handling in all contract functions to prevent reentrancy, denial-of-service (DoS), and other attacks. +- Implement proper input validation and error handling in all contract functions to prevent reentrancy, denial-of-service (DoS), and other attacks. +- Consider implementing a more robust mechanism for handling contract errors, such as reverting the contract or logging an error message, instead of relying on a single Exit event. +- Consider implementing a more robust mechanism for handling contract errors, such as reverting the contract or logging an error message, instead of relying on a single Exit event. + +## 9. Learning And Insights + +- **Understanding of cross-chain bridges**: Taiko codebase deals with bridges for transferring assets between different blockchain networks, which is a complex and interesting problem. Reviewing this codebase helped me to understand the challenges involved in building cross-chain bridges and the different approaches used to solve them. +- **Better understanding of L2 scaling solutions**: Taiko codebase is built on top of L2 scaling solutions such as Optimism and ZK-Rollups. Reviewing this codebase helped me to understand how these L2 solutions work and how they can be used to build scalable blockchain applications. +- **Understanding of cryptography and security**: Taiko codebase involves cryptographic protocols such as ECDSA signatures and elliptic curve cryptography. Reviewing this codebase helped me to understand the importance of security in blockchain development and the different techniques used to ensure the security of the system. +- **Code organization and readability**: Taiko codebase is well-organized and easy to read, with consistent naming conventions and well-documented code. Reviewing this codebase helped me to understand the importance of code organization and readability in blockchain development. +- **Modularity and reusability**: Taiko codebase makes extensive use of libraries and interfaces, which helps to promote code modularity and reusability. Reviewing this codebase helped me to understand the importance of designing code for reuse and how to build reusable components in blockchain development. +- **Learning from experienced developers**: Taiko codebase is developed by experienced developers who have a deep understanding of blockchain technology and smart contract development. Reviewing this codebase helped me to learn from their experience and expertise. + +## 10. Conclusion + +I reviewed the Taiko codebase and identified several strengths, weaknesses, opportunities, and threats (SWOT analysis) for the project. I found that the codebase is well-structured, well-documented, and follows best practices for blockchain development. The team has taken a security-focused approach to development, with a strong emphasis on formal verification and testing. + +However, there are some areas for improvement, including the need for additional input validation, error handling, and gas optimization techniques. Additionally, there are some potential risks associated with the use of L2 scaling solutions and cross-chain bridges, including the need for adequate security measures to prevent attacks and ensure data consistency and integrity. + +To address these challenges, I recommend that the Taiko team continue to prioritize security and best practices throughout the development process. This includes implementing additional input validation, error handling, and gas optimization techniques, as well as conducting ongoing security testing and auditing. Additionally, the team should consider implementing multi-party computation techniques, such as threshold signing, to decentralize the responsibility for critical tasks and improve the system's overall resilience. + +Overall, the Taiko codebase is a solid foundation for building a scalable and secure L2 scaling solution. With continued attention to detail and commitment to best practices, the Taiko project is well-positioned for long-term success. + +## 11. Message For Taiko Team + +Congratulations to the Taiko team on a successful audit! It's clear that a lot of work and dedication has gone into building this project, and the attention to detail and thoughtfulness that went into the code and documentation is commendable. + +The codebase is well-structured and organized, and it's clear that the team has a deep understanding of blockchain technology and smart contract development. The use of libraries and interfaces to promote modularity and reusability is particularly impressive, as is the attention paid to security and cryptography. + +As a warden in the Code4rena community, I'm always impressed when I see a project that takes security seriously, and the Taiko team's approach to security is commendable. The team's commitment to testing and formal verification is a clear sign that they take security seriously, and I believe this will help to build trust and confidence in the Taiko project. + +Overall, I'm excited to see where the Taiko project will go, and I'm confident that the team's dedication and expertise will help to ensure its success. Keep up the great work, and thank you for the opportunity to review your code! + +## 12. Time Spent + +| Task | Time Spent (hours) | +| ------------------------- | ------------------ | +| Analysis of documentation | 20 | +| Review of Taiko codebase | 40 | +| Preparation of report | 10 | +| Total time spent | 70 | + +## 13. References + +- https://github.com/code-423n4/2024-03-taiko +- https://docs.taiko.xyz/start-here/getting-started +- https://taiko.mirror.xyz/oRy3ZZ_4-6IEQcuLCMMlxvdH6E-T3_H7UwYVzGDsgf4 +- https://www.datawallet.com/crypto/what-is-taiko +- https://medium.com/@mustafa.hourani/interview-with-taiko-a-leading-type-1-zkevm-ddf71eb4eabe +- https://taiko.mirror.xyz/y_47kIOL5kavvBmG0zVujD2TRztMZt-xgM5d4oqp4_Y?ref=bankless.ghost.io + +### Time spent: + +70 hours