Weak signature validation allows multiple option mispricing vectors

Impact: Medium

Likelihood: Medium

The protocol's signature validation mechanism enables option mispricing through period manipulation and stale signatures:

1. Period and Maturity Mismatch

function _hash(...) internal pure returns (bytes32) {
@>  return keccak256(abi.encode(iv, uAsset, oType, maturityDate, relativeStrike));
}

function iv(uint48 period, OptionType oType, uint256 strikePrice) external view returns (uint256 value) {
@>  value = _ivValues[period][oType][strikePrice]; // IV is queried based on `period`, `oType` and `strikePrice`
}

2. Missing Signature Deadline

function _recoverSigner(...) internal view returns (address) {
@>  address recoveredSigner = _recoverSigner(sig, iv, strategy, period._computeMaturityDate(), relativeStrike);
}

This enables two primary attack vectors:

1. Period Manipulation

• User requests signature for a 14-day period on April 3 (maturity: April 17 23:59).
• On April 10, the user executes the option with a 7-day period (maturity: April 17 23:59, results in the same maturity).
• The process validates this position with IV intended for a 14-day period, mispricing the option.

2. Stale Strike Price

• User requests signature for a 10% relative strike at a spot price 3500 USD(strike = 3850 USD).
• User waits until the market moves to some spot price, ie 4200 USD (new strike = 4620 USD).
• User executes the option with a stale signature, still using the IV for strike 3850 USD.
• The protocol applies an outdated IV, mispricing the option.

Include all critical parameters and enforce signature expiration validation:

function _hash(...) internal pure returns (bytes32) {
    return keccak256(abi.encode(
        iv,
        uAsset,
        oType,
+       period,
        maturityDate,
        relativeStrike,
+       deadline
    ));
}

Published by Pashov Audit Group, with Carlos (Bloqarl) participating as a contractor. The source report states that its fixes review was not fully completed; no final remediation disposition is recorded for this finding. Read the full report.