mev-beta/docs/reports/security_audit.md

MEV Bot Security Audit Report

Date: September 14, 2025
Security Auditor: Claude AI Assistant
Scope: Complete codebase security analysis
Methodology: Static analysis, code review, threat modeling

Executive Summary

SECURITY RATING: ⚠️ HIGH RISK - Multiple critical vulnerabilities found

The MEV bot contains several critical security vulnerabilities that could lead to:

• Loss of funds through malicious contract interaction
• Private key exposure
• Transaction manipulation attacks
• Rate limiting bypasses
• Information disclosure

Immediate Action Required: Address all critical vulnerabilities before any deployment.

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1. CRITICAL VULNERABILITIES (CVSS 9.0-10.0)

🔴 CRITICAL-001: Inadequate Pool Validation

File: pkg/uniswap/contracts.go:364-373
CVSS Score: 9.5
Risk: Direct financial loss through malicious contract interaction

// VULNERABLE CODE:
func (p *UniswapV3Pool) IsValidPool(ctx context.Context) (bool, error) {
    code, err := p.client.CodeAt(ctx, p.address, nil)
    if err != nil {
        return false, err
    }
    return len(code) > 0, nil  // ❌ ONLY CHECKS IF CODE EXISTS
}

Vulnerability: The validation only checks if code exists at the address, not whether it's a legitimate pool contract.

Attack Vector:

1. Attacker deploys malicious contract at predicted address
2. Contract appears valid to the bot
3. Bot attempts to trade, loses funds to malicious contract

Impact: Complete loss of trading capital

Remediation:

func (p *UniswapV3Pool) IsValidPool(ctx context.Context) (bool, error) {
    // 1. Verify contract implements IUniswapV3Pool interface
    // 2. Check factory deployment via CREATE2
    // 3. Validate token0 < token1 invariant
    // 4. Verify fee tier is valid
    // 5. Cross-check with factory registry
}

🔴 CRITICAL-002: Missing Private Key Security

File: pkg/security/keymanager.go
CVSS Score: 9.0
Risk: Private key exposure and unauthorized transactions

// MISSING IMPLEMENTATION - NO SECURE KEY STORAGE

Vulnerability: No secure private key management implementation found.

Attack Vector:

1. Private keys stored in plaintext/memory
2. Key exposure through logs or memory dumps
3. Unauthorized transaction signing

Impact: Complete compromise of trading wallet

Remediation Required:

• Hardware security module (HSM) integration
• Encrypted key storage with strong encryption
• Key derivation with proper entropy
• Secure key rotation mechanisms
• Multi-signature requirements for large transactions

🔴 CRITICAL-003: Insufficient Transaction Validation

File: pkg/arbitrum/l2_parser.go, pkg/events/parser.go
CVSS Score: 8.5
Risk: Malicious transaction execution

Vulnerability: Transaction parameters not properly validated before execution.

Attack Vector:

1. Attacker crafts transaction with extreme parameters
2. Bot executes without proper bounds checking
3. Results in unexpected losses or contract failures

Missing Validations:

• Slippage bounds checking
• Maximum gas price limits
• Token address validation
• Amount range validation
• Deadline validation

2. HIGH VULNERABILITIES (CVSS 7.0-8.9)

🟠 HIGH-001: Rate Limiting Bypass

File: internal/ratelimit/adaptive.go:420
CVSS Score: 7.5
Risk: Resource exhaustion and API abuse

// VULNERABLE CODE:
// Simplified health check - in production would make actual RPC call
func (rl *AdaptiveRateLimiter) healthCheck() bool {
    return true  // ❌ ALWAYS RETURNS TRUE
}

Vulnerability: Rate limiter health checks are simulated, making the system vulnerable to API abuse.

Attack Vector:

1. Attacker floods system with requests
2. Rate limiter cannot detect endpoint stress
3. System overwhelmed, missing profitable opportunities

🟠 HIGH-002: Information Disclosure in Error Messages

Files: Multiple locations
CVSS Score: 7.0
Risk: Internal state disclosure

Vulnerability: Error messages contain sensitive information about internal operations.

Examples:

return fmt.Errorf("failed to connect to Ethereum node: %w", err)  // ❌ EXPOSES INTERNAL URLS
return nil, fmt.Errorf("invalid pool contract at address %s", addr)  // ❌ REVEALS VALIDATION LOGIC

🟠 HIGH-003: Logging Sensitive Data

Files: Multiple logging statements
CVSS Score: 7.0
Risk: Credential leakage through logs

Vulnerability: Debug logs may contain sensitive information.

log.Debug(fmt.Sprintf("RPC Endpoint: %s", cfg.Arbitrum.RPCEndpoint))  // ❌ MAY CONTAIN API KEYS

3. MEDIUM VULNERABILITIES (CVSS 4.0-6.9)

🟡 MEDIUM-001: Weak Input Sanitization

File: pkg/validation/input_validator.go
CVSS Score: 6.5
Risk: Input validation bypass

Vulnerability: Insufficient validation of user inputs and configuration values.

🟡 MEDIUM-002: Dependency Vulnerabilities

Files: go.mod, vendor dependencies
CVSS Score: 6.0
Risk: Known vulnerabilities in dependencies

Findings:

• Some dependencies may have known security vulnerabilities
• No automated vulnerability scanning in place
• Dependencies not regularly updated

🟡 MEDIUM-003: Improper Error Handling

Files: Multiple locations
CVSS Score: 5.5
Risk: Application state corruption

Vulnerability: Many functions don't properly handle error conditions, potentially leaving the system in an inconsistent state.

4. LOW VULNERABILITIES (CVSS 0.1-3.9)

🟢 LOW-001: Configuration Exposure

File: internal/config/config.go
CVSS Score: 3.0
Risk: Information disclosure

Vulnerability: Configuration values logged in debug mode may reveal system internals.

🟢 LOW-002: Timing Attack Susceptibility

Files: Multiple comparison operations
CVSS Score: 2.5
Risk: Information disclosure through timing analysis

5. THREAT MODEL ANALYSIS

5.1 Attack Surfaces

1. External API Endpoints: RPC connections to Ethereum/Arbitrum
2. Smart Contract Interactions: Pool contracts and factory contracts
3. Private Key Management: Wallet and signing operations
4. Configuration Management: Environment variables and config files
5. Logging System: Log files and debug output

5.2 Threat Actors

1. Malicious Contract Deployers: Deploy fake pools to steal funds
2. Network Attackers: Man-in-the-middle attacks on RPC connections
3. Internal Threats: Compromised development/deployment environment
4. Sophisticated MEV Bots: Competing bots trying to front-run

5.3 Attack Scenarios

Scenario 1: Malicious Pool Attack

1. Attacker predicts pool address using CREATE2
2. Deploys malicious contract at predicted address
3. Bot identifies "pool" as valid trading opportunity
4. Bot executes trade, transfers funds to malicious contract
5. Attacker drains funds

Scenario 2: Private Key Compromise

1. Attacker gains access to deployment environment
2. Extracts private keys from memory/storage
3. Uses keys to drain wallet or execute unauthorized trades
4. Transfers profits to attacker-controlled address

Scenario 3: Rate Limiting Bypass

1. Attacker identifies rate limiting weaknesses
2. Floods system with requests to overwhelm rate limiter
3. Causes system to miss profitable opportunities
4. Attacker's own bot capitalizes on missed opportunities

6. SECURITY RECOMMENDATIONS

6.1 IMMEDIATE FIXES (Critical Priority)

1. Implement Comprehensive Pool Validation

func ValidateUniswapV3Pool(ctx context.Context, address common.Address) error {
    // 1. Verify deployment via factory
    factory := common.HexToAddress("0x1F98431c8aD98523631AE4a59f267346ea31F984")
    expectedAddr := CalculateCreate2Address(factory, token0, token1, fee)
    if address != expectedAddr {
        return ErrInvalidPoolAddress
    }
    
    // 2. Verify interface compliance
    if !ImplementsInterface(address, IUniswapV3PoolABI) {
        return ErrInvalidInterface
    }
    
    // 3. Validate invariants
    if token0.Cmp(token1) >= 0 {
        return ErrInvalidTokenOrder
    }
    
    return nil
}

2. Implement Secure Key Management

type SecureKeyManager struct {
    hsm        HSMInterface
    encryptKey []byte
    keyDerivation func([]byte) ([]byte, error)
}

func (km *SecureKeyManager) SignTransaction(tx *types.Transaction) (*types.Transaction, error) {
    // 1. Decrypt key from secure storage
    // 2. Validate transaction parameters
    // 3. Sign with hardware security module
    // 4. Clear sensitive data from memory
    // 5. Return signed transaction
}

3. Add Transaction Validation

func ValidateTransactionParams(params TradingParams) error {
    if params.Slippage > MAX_SLIPPAGE_BPS {
        return ErrSlippageExceedsLimit
    }
    if params.Amount.Cmp(MAX_TRADE_AMOUNT) > 0 {
        return ErrAmountExceedsLimit
    }
    if !IsValidTokenAddress(params.TokenIn) {
        return ErrInvalidTokenAddress
    }
    return nil
}

6.2 SECURITY CONTROLS TO IMPLEMENT

1. Multi-Layer Security Architecture

• Network Layer: TLS 1.3 for all external communications
• Application Layer: Input validation and sanitization
• Contract Layer: Comprehensive smart contract validation
• Key Management Layer: HSM or secure enclave integration

2. Monitoring and Alerting

• Real-time security event monitoring
• Anomaly detection for unusual trading patterns
• Rate limiting and DDoS protection
• Automated incident response

3. Security Testing

• Regular penetration testing
• Automated security scanning
• Dependency vulnerability monitoring
• Code review security checklists

6.3 SECURE DEVELOPMENT PRACTICES

1. Code Review Requirements

• Security-focused code reviews for all changes
• Static analysis security testing (SAST)
• Dynamic analysis security testing (DAST)
• Dependency vulnerability scanning

2. Deployment Security

• Secure deployment pipelines
• Environment isolation
• Secret management
• Configuration validation

7. COMPLIANCE CONSIDERATIONS

7.1 Financial Regulations

• AML/KYC: May be required depending on jurisdiction
• Securities Laws: MEV activities may be subject to trading regulations
• Data Protection: User data handling compliance (GDPR, CCPA)

7.2 Smart Contract Security Standards

• EIP-1167: Minimal proxy contract standard
• EIP-2612: Permit signature standard
• CEI Pattern: Checks-Effects-Interactions pattern

8. SECURITY METRICS

8.1 Current Security Posture

• Critical Vulnerabilities: 3 found
• High Vulnerabilities: 3 found
• Medium Vulnerabilities: 3 found
• Low Vulnerabilities: 2 found
• Security Test Coverage: 0%

8.2 Target Security Posture

• Critical Vulnerabilities: 0
• High Vulnerabilities: 0
• Medium Vulnerabilities: ≤ 2
• Low Vulnerabilities: ≤ 5
• Security Test Coverage: ≥ 80%

9. REMEDIATION TIMELINE

Phase 1: Critical Fixes (1-2 weeks)

• Implement secure pool validation
• Add private key security
• Implement transaction validation
• Fix rate limiting vulnerabilities

Phase 2: High Priority Fixes (1 week)

• Improve error handling
• Remove sensitive data from logs
• Add input sanitization
• Update vulnerable dependencies

Phase 3: Medium Priority Fixes (1 week)

• Implement comprehensive monitoring
• Add security testing
• Improve configuration security
• Add incident response procedures

10. CONCLUSION

SECURITY VERDICT: ❌ NOT SECURE FOR PRODUCTION

The MEV bot contains multiple critical security vulnerabilities that pose significant financial and operational risks. Immediate remediation is required before any production deployment.

Key Risks:

1. Financial Loss: Malicious contract interactions could drain trading capital
2. Key Compromise: Inadequate private key security could lead to wallet compromise
3. System Abuse: Rate limiting weaknesses could be exploited
4. Information Disclosure: Sensitive data exposure through logs and errors

Recommendation: Complete all critical and high priority security fixes before considering production deployment.

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Security Audit Completed: September 14, 2025
Next Security Review: After implementing recommended fixes
Emergency Contact: Halt all deployment activities until security issues resolved