DeepHigh Web3 Lending Audit Project

Welcome to the Web3 Lending Audit Project. This documentation is designed to guide developers, auditors, and contributors in understanding and enhancing security within decentralized lending protocols. As Web3 continues to reshape finance with its open, permissionless, and user-driven systems, robust security for these protocols is essential. Through this framework, we aim to empower users to develop and maintain secure, reliable lending mechanisms in the decentralized finance (DeFi) ecosystem.

Overview

This GitBook encompasses our team’s rigorous threat modeling approach to systematically assess and fortify DeFi lending protocols. This approach, tailored as an alternative to traditional Web2 frameworks like STRIDE, addresses Web3’s unique risks. It is divided based on the presence or absence of an attacker:

If an Attacker is Present:

• Griefing: Risks associated with users or attackers intentionally disrupting the protocol or causing inconvenience without direct benefit.

• Theft of Asset: Concerns around unauthorized access or misappropriation of assets within the protocol.

• Operational Risk: Risks associated with protocol operations that could be exploited by malicious actors.

If No Attacker is Present:

• User Experience (UX): Risks that arise from issues in design, usability, and overall user interaction, affecting users even in the absence of malicious actors.

• Loss of Funds: Financial losses caused by system failures, bugs, or unforeseen circumstances that affect user assets without external interference.

• Operational Risk: Internal risks within protocol operations, such as smart contract bugs or configuration errors, that pose risks even without an active attacker.

Together, these categories form a holistic threat model that enables the identification and mitigation of risks in decentralized lending environments, adapted specifically for the unique challenges and needs of DeFi.

Topics Covered

This documentation provides in-depth insights into the following key areas:

• Protocol Design & Architecture: Understand the structure of decentralized lending protocols, including transaction flows and smart contract architecture.

• Security Assessment Framework: Delve into our methodologies for risk assessment and mitigation, tailored specifically to lending protocols, addressing challenges such as liquidation vulnerabilities, token mispricing, and governance manipulation.

• Common Vulnerabilities: Explore typical DeFi security issues, such as reentrancy attacks, price manipulation, and front-running, with insights into preventive measures.

• Audit Methodologies and Best Practices: Access best practices, tools, and strategies for auditing protocol code, security configurations, and smart contract integrations.

Mission & Vision

Our mission is to bolster the resilience of Web3 lending ecosystems by establishing transparent, community-driven security standards. We envision a decentralized financial future that is secure, accessible, and trustworthy for all participants.

Who is this for?

This GitBook is intended for developers, auditors, security researchers, and Web3 enthusiasts invested in the integrity of DeFi lending systems. Whether you’re developing, auditing, or simply exploring the security of Web3 lending, this guide provides tools, resources, and best practices to support robust protocol development.

Join us in strengthening the Web3 lending ecosystem by diving into our framework and contributing to a safer DeFi landscape!