Possum Labs Audit Competition- rewards up to $20K in USDC

HatsFinance
6 min readNov 13, 2023

Starting Nov 15th, 2023, at 16:00 GMT to Nov 29th, 2023, at 16:00 GMT

We invite all white hat hackers to join the hunt on Possum Labs audit competition

All experience levels are welcome; whether you are a seasoned security veteran or an amateur, show us what you got! Prizes will be given based on the severity level of each vulnerability found.

About the Competition

Starting Nov 15th, a new vault will open in the Hats dApp — “Possum”.
Participants can check the contracts in scope and start searching for bugs.

Possum Labs is pioneering a new DeFi ecosystem with the ethos of a “positive sum” game, where every participant gains fairly. Challenging the traditional financial system, where a few entities hold disproportionate sway over global assets, Possum Labs is addressing deep-rooted issues like the principal-agent conflict. This conflict often sees asset managers prioritize their own gains over their clients’ interests. To counteract this, Possum Labs is crafting innovative financial tools governed by on-chain protocols, ensuring transparency and equitable control. Their inaugural offering, Possum Portals, is set to be the first in a series of financial products designed to democratize asset management and align incentives across the board.

Stay up-to-date with the competition, chat with the team, and get your questions answered by joining the dedicated Discord channel on the Hats server.
All audit reports will be published in our Discord on the day of the competition. Don’t miss the latest updates and insights — join now and be the first to know!

Audit competition rewards

  • Deposited Amount: The deposited ~$25K in USDC, making the available prize pool ~$20K in USDC.
  • Service Fee: All rewards mentioned in this article and on the Hats dApp UI have already deducted a 20% Hats service fee.
  • Severities: Low, Medium, High.

Reward Calculation Explained

For our audit competition, the entire prize pool is up for grabs across all severity levels. Each level has a maximum reward cap and a designated point value, which are both used to calculate the rewards.

Maximum Reward Caps per Submission:

  • Low Severity: 2,000 USDC
  • Medium Severity: 10,000 USDC
  • High Severity: 20,000 USDC

Points Allocation per Severity:

  • Low: 2 points
  • Medium: 10 points
  • High: 20 points

Points are consistently awarded within the same severity level unless the committee decides to adjust this. For instance, both the first and second low-severity findings will earn 2 points each. This standard applies to medium and high severities as well.

Calculating the Winner’s Reward:
The formula for a winner’s reward is as follows:

Winner’s Reward= Prize pool / Total points awarded*Winner’s points

However, the reward for each finding cannot exceed the maximum cap for its severity level.

Examples for Clarity:
Example #1:

  • 1st Low Severity: 2 points
  • 2nd Low Severity: 2 points
  • 1st Medium Severity: 10 points
  • 1st High Severity: 20 points
  • 2nd High Severity: 20 points

In this scenario:

  • Reward for 1 Low Severity Finding = 20,000 USDC/54 Total points * 2 Points = 740.74 USDC
  • Reward for 1 High Severity Finding = 20,000 USDC/54 Total points * 20 Points = 7,407.40 USDC
  • Value of 1 Point = 370.37 USDC

Example #2:

  • 5 Low Severity Findings: 10 points total

Here:

  • Reward for 1 Low Severity Finding = 20,000 USDC/10 Total points*2 Points=4,000 USDC
  • However, since the cap for a Low Severity finding is 2,000 USDC, the reward per Low Severity finding is adjusted to 2,000 USDC.

Severities

High Severity

The total prize pool for High severities is set at ~$20K in USDC.
However, there is a max reward cap of $20k for a single high submission.

Each new issue gets 20 points. The total High-severity reward will be calculated as described in the rewards calculation above.

High-severity vulnerability description:

For a submission to be considered a HIGH-risk vulnerability, issues must:

  • Direct theft of any user funds, whether at rest or in motion
  • Long-term freezing of user funds
  • Theft or long-term freezing of unclaimed yield or other assets
  • Protocol insolvency

Medium Severity

The total prize pool for Medium severities is set at ~$20K in USDC.
However, there is a max reward cap of $10k for a single medium submission.

Each new issue gets 10 points. The total Medium-severity reward will be calculated as described in the rewards calculation above.

Medium severity vulnerability description:

Issues that lead to an economic loss but do not lead to direct loss of on-chain assets. Examples are:

  • Gas griefing attacks (make users overpay for gas)
  • Attacks that make essential functionality of the contracts temporarily unusable or inaccessible
  • Short-term freezing of user funds

Low severity

The total prize pool for Low severities is set at ~$20K in USDC.
However, there is a max reward cap of $2k for a single low submission.

Each new issue gets 2 points. The total Low-severity reward will be calculated as described in the rewards calculation above.

Low severity vulnerability description:

  • Issues where the behavior of the contracts differs from the intended behavior (as described in the docs and by common sense), but no funds are at risk.

Limitations

Reporters will not receive a bounty for any known issue, such as:

  • Issues mentioned in any previous audit reports
  • Vulnerabilities that were already made public (either by HATs or by a third party)
  • “Centralization risks” that are known and/or explicitly coded into the protocol (e.g. an administrator can upgrade crucial contracts and steal all funds)
  • Attacks that require access to leaked private keys or trusted addresses
  • Issues/contracts mentioned in the out-of-scope section

Submission Guidelines — High/Medium/Low severities:

General Information:

  • The Hats team will create a new repository called “PossumAudit Competition” under the Hats.finance organization on GitHub. The repository will be kept private until the competition starts. Hats bot will fork it on the first submission. To participate, security researchers must submit their findings on-chain, and an automatic GitHub issue will be generated in the forked repository.
  • How it Works: Video Explanation

SUBMISSION GUIDELINES:

  • Submissions should be made using our Dapp.
  • You can submit one on-chain submission mentioning all issues found on the repo.
  • All new submissions will be created on Hats forked repo on Hats: Hats GitHub
  • Report Format:
  • Please send a plain ASCII description in the following format:
  • [TITLE]: A short description of the issue.
  • SEVERITY: Either High, Medium, or Low (as per the rules).
  • Submission should contain at least one test demonstrating the problem and, if possible, a possible fix.
  • Report Template:
  • Description: Describe the context and the effect of the vulnerability.
  • Attack scenario: Describe how the vulnerability can be exploited.
  • Attachment:
  • Proof of Concept (PoC) File: Provide a file containing a proof of concept (PoC) that demonstrates the vulnerability.
  • Revised Code File (Optional): If possible, provide a second file containing the revised code that offers a potential fix for the vulnerability. This file should include:
  • Comment with a clear explanation of the proposed fix.
  • The revised code with suggested changes.
  • Add any additional comments or explanations clarifying how the fix addresses the vulnerability.
  • Recommendation: Describe a patch or potential fix for the vulnerability.

***Due to the nature of the audit competition mechanism, the report will not be encrypted.***

Evaluation:

  • The first participant to submit an issue following guidelines gets a bounty for that issue (issues already received or out of scope will not receive a reward).
  • The competition starts on Nov 15th at 16:00 GMT and ends on NOV 29th at 16:00 GMT.
  • Issues that we are aware of (as witnessed by any open issues in the repository) will not be eligible for the bug bounty.

Compensation and Impact

A prize pool of ~$20K In USDC and NFT rewards from our hacker collection will be distributed among security researchers who submit eligible vulnerability disclosures.

Compensation payment timeline:

  • Ten days after the competition ends, we will announce a winner list.
  • Alongside the winner announcement post, submitters can send disputes to the committee team and request clarification. They can also involve the Hats security team in the process. The goal is to facilitate honest and professional debate regarding disputed submissions.
  • Between 7–14 days after the announcement, we will publish a split contract where the winners can claim their rewards.
  • HATS Service Fee: A 20% deduction from the payout will always be allocated as the service fee.

Security researchers play a crucial role in fostering trust and confidence in Web3 technologies, paving the way for mass adoption. By participating in this competition, security researchers can gain recognition for their work, raise their profile, and make valuable connections in the Web3 security ecosystem. Ultimately, they can contribute to creating a more secure and equitable community.

Join Possum Labs Audit Competition today and participate in the movement to secure the future of Web3 and decentralized finance. Check the Hats Finance dApp for more information and in-scope contracts.

Stay tuned and check Hats dApp:https://app.hats.finance/audit-competitions

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