Open Dollar - Smart Contract Audit
Summary
Open Dollar is a stablecoin protocol built on Arbitrum that allows minting stablecoins against overcollaterised deposits. The protocol is designed to work with Liquid Staking Tokens that generate yield for the user while being deposited in a SAFE. The key feature of the protocol is that SAFE ownership is designated by NFT ownership, making it an NFV (Non-Fungible Vault). The introduction of the NFV allows for a new financial instrument, where one can trade the debt locked in the vault. During the audit, 13 issues were identified, ranging from Medium to Info severity. We recommend that all issues be addressed before deploying the protocol. The majority of issues that have been identified have a straightforward fix, but some may require further planning. One of the key issues that needs to be thought through is the sale process of the NFV, as most exchanges are noncustodial, allowing the user to make changes to the vault just before accepting the bid. More of the issue is described in OD-1. This issue is also made worse with OD-8, as the delay between changes to the NFV and transfer is only 1 minute. The other issue that should be carefully considered is OD-13. The main collateral type is Liquid Staking Tokens (LST), which are tokenized representations of deposits made to ethereum validators. The highest risk is a validator getting slashed, which could lead to LST to depeg, and potentially SAFEs getting liquidated. There are already many safeguards in place such as overcollaterisation, max cap of one type of LST, debt auctions that would cover the bad debt, ability to pause the auction and, in the worst case, a global settlement that attempts to recover the system in case of a severe depeg. However, users should note that the stability of the peg is dependent on the absence of major slashing events. The Open Dollar team was in steady communication throughout the audit, providing support and answering questions. **Fix Review** All issues identified have been either fixed or acknowledged. OD-1 and OD-13 have received a lot of discussion and research from the Open Dollar team, which can be seen in the issue and the acknowledgment descriptions. The test suite has been adequately adapted to the changes made.
