Security Architecture

Loopify Finance implements comprehensive security measures across flash loan operations, yield optimization strategies, and user fund protection.

Core Security Principles

Focus on three strategic areas:

Flash Loan Looping - Leveraged yield strategies
Yield Optimization - Automated yield farming
Pre-deposit System - Points-based early access with TGE conversion

Smart Contract Security

Access Control & Role Management

// Complete role-based access control with hierarchy
bytes32 public constant STRATEGIST_ROLE = keccak256("STRATEGIST_ROLE");
bytes32 public constant LIQUIDATOR_ROLE = keccak256("LIQUIDATOR_ROLE");
bytes32 public constant KEEPER_ROLE = keccak256("KEEPER_ROLE");
bytes32 public constant PAUSER_ROLE = keccak256("PAUSER_ROLE");
bytes32 public constant RECOVERY_ROLE = keccak256("RECOVERY_ROLE");
bytes32 public constant GUARDIAN_ROLE = keccak256("GUARDIAN_ROLE");

uint256 public constant TIMELOCK_DURATION = 48 hours;

// Role hierarchy setup
function _setupRoles() internal {
    _setRoleAdmin(STRATEGIST_ROLE, DEFAULT_ADMIN_ROLE);
    _setRoleAdmin(LIQUIDATOR_ROLE, DEFAULT_ADMIN_ROLE);
    _setRoleAdmin(KEEPER_ROLE, STRATEGIST_ROLE);
    _setRoleAdmin(PAUSER_ROLE, GUARDIAN_ROLE);
    _setRoleAdmin(RECOVERY_ROLE, GUARDIAN_ROLE);
}

// Role renunciation mechanism
function renounceRoleWithTimelock(bytes32 role) external {
    require(hasRole(role, msg.sender), "Caller doesn't have role");
    _scheduleRoleRenunciation(role, msg.sender, block.timestamp + TIMELOCK_DURATION);
}

Key Roles:

Guardian: Highest security role for emergency actions
Strategist: Strategy deployment and configuration
Liquidator: Emergency position liquidation
Keeper: Automated monitoring and rebalancing
Pauser: Emergency pause functionality
Recovery: Stuck position recovery operations

Flash Loan Security

// Enhanced flash loan security with gradual scaling
uint256 public constant MAX_FLASH_LOAN_AMOUNT = 10_000_000e18; // Start with $10M
uint256 public constant FLASH_LOAN_FEE_TOLERANCE = 10; // 0.1% max fee
uint256 public constant DEFAULT_USER_LIMIT = 1_000_000e18; // $1M default

mapping(address => uint256) public userFlashLoanLimit;
mapping(address => uint256) public userTrustScore;
uint256 public globalFlashLoanUsage;

function validateFlashLoanExecution(
    address user,
    uint256 amount,
    uint256 fee
) internal nonReentrant returns (bool) {
    require(amount <= getUserFlashLoanLimit(user), "Exceeds user limit");
    require(globalFlashLoanUsage + amount <= MAX_FLASH_LOAN_AMOUNT, "Exceeds global limit");
    require(fee <= (amount * FLASH_LOAN_FEE_TOLERANCE) / 10000, "Fee too high");

    globalFlashLoanUsage += amount;
    return true;
}

// Trust-based user limits
function getUserFlashLoanLimit(address user) public view returns (uint256) {
    uint256 trustScore = userTrustScore[user];
    if (trustScore >= 100) return MAX_FLASH_LOAN_AMOUNT;
    if (trustScore >= 50) return MAX_FLASH_LOAN_AMOUNT / 2;
    if (trustScore >= 10) return MAX_FLASH_LOAN_AMOUNT / 10;
    return DEFAULT_USER_LIMIT;
}

Health Factor Monitoring

Continuous position health tracking with automated protection:

// FIXED: Correct health factor calculation with proper decimals
uint256 public constant SAFETY_BUFFER = 5e16; // 5% buffer
uint256 public constant MIN_HEALTH_FACTOR = 101e16; // 1.01 liquidation threshold

function calculateHealthFactor(
    uint256 collateralValue,
    uint256 debtValue,
    uint256 liquidationThreshold
) public pure returns (uint256) {
    require(liquidationThreshold <= 100, "Invalid threshold > 100%");
    require(liquidationThreshold > 0, "Invalid threshold = 0");

    if (debtValue == 0) return type(uint256).max;

    // FIXED: Proper calculation with 18 decimal precision (divide by 100, not 10000)
    return (collateralValue * liquidationThreshold * 1e18) / (debtValue * 100);
}

// Enhanced validation with safety buffer
function isPositionSafe(
    uint256 collateralValue,
    uint256 debtValue,
    uint256 liquidationThreshold
) public pure returns (bool) {
    uint256 healthFactor = calculateHealthFactor(collateralValue, debtValue, liquidationThreshold);
    return healthFactor >= MIN_HEALTH_FACTOR + SAFETY_BUFFER;
}

Protection Thresholds (18 decimal precision):

Safe: > 2.0e18 (200% health factor)
Warning: 1.5e18 - 2.0e18 (150-200%)
Critical: 1.05e18 - 1.5e18 (105-150%)
Emergency: < 1.05e18 (auto-deleverage)

Operational Security

Circuit Breakers & Emergency Controls

// Emergency pause system
function emergencyShutdown(string calldata reason) external onlyRole(PAUSER_ROLE) {
    _pause();

    // Pause all strategy types
    strategyPaused[keccak256("FLASH_LOAN_LOOPING")] = true;
    strategyPaused[keccak256("YIELD_OPTIMIZATION")] = true;
    strategyPaused[keccak256("PRE_DEPOSIT")] = true;

    emit EmergencyShutdown(msg.sender, reason);
}

Oracle Security

Multi-oracle price validation with comprehensive median calculation:

uint256 public constant PRICE_DEVIATION_THRESHOLD = 300; // 3% max deviation
uint256 public constant STALE_PRICE_THRESHOLD = 3600; // 1 hour staleness limit

struct PriceData {
    uint256 price;
    uint256 timestamp;
    address source;
}

function getSecurePrice(address asset) external view returns (uint256) {
    PriceData[] memory prices = new PriceData[](3);

    // Get prices from multiple sources
    prices[0] = getChainlinkPrice(asset);
    prices[1] = getUniswapTWAP(asset);
    prices[2] = getPythPrice(asset);

    // Validate price freshness
    for (uint i = 0; i < prices.length; i++) {
        require(
            block.timestamp - prices[i].timestamp <= STALE_PRICE_THRESHOLD,
            "Stale price detected"
        );
        require(prices[i].price > 0, "Invalid price");
    }

    // Calculate median price
    uint256 medianPrice = calculateMedian(prices);

    // Validate price deviation
    for (uint i = 0; i < prices.length; i++) {
        uint256 deviation = abs(prices[i].price - medianPrice) * 10000 / medianPrice;
        require(deviation <= PRICE_DEVIATION_THRESHOLD, "Price deviation too high");
    }

    return medianPrice;
}

// Bubble sort for median calculation (3 elements only)
function calculateMedian(PriceData[] memory prices) internal pure returns (uint256) {
    require(prices.length == 3, "Expected 3 price sources");

    // Sort prices array
    for (uint i = 0; i < 2; i++) {
        for (uint j = 0; j < 2 - i; j++) {
            if (prices[j].price > prices[j + 1].price) {
                PriceData memory temp = prices[j];
                prices[j] = prices[j + 1];
                prices[j + 1] = temp;
            }
        }
    }

    // Return median (middle value)
    return prices[1].price;
}

function abs(uint256 a - uint256 b) internal pure returns (uint256) {
    return a >= b ? a - b : b - a;
}

Runtime Security Monitoring

Automated Monitoring

24/7 Health Factor Tracking: Continuous calculation across all positions
Price Feed Integration: Multiple oracle sources for accurate valuations
Gas-Optimized Checks: Efficient monitoring without excessive costs
Multi-Position Management: Simultaneous tracking of leveraged strategies

Enhanced Recovery System

enum PositionStatus { ACTIVE, WARNING, STUCK, RECOVERING, CLOSED }

struct Position {
    uint256 id;
    PositionStatus status;
    uint256 lastHealthCheck;
    uint256 recoveryAttempts;
    uint256 stuckTimestamp;
}

uint256 public constant MAX_RECOVERY_ATTEMPTS = 3;

mapping(address => mapping(uint256 => Position)) public positions;

function recoverStuckPosition(
    address user,
    uint256 positionId
) external onlyRole(RECOVERY_ROLE) nonReentrant {
    Position storage position = positions[user][positionId];
    require(position.status == PositionStatus.STUCK, "Position not stuck");
    require(position.recoveryAttempts < MAX_RECOVERY_ATTEMPTS, "Max attempts exceeded");

    position.status = PositionStatus.RECOVERING;
    position.recoveryAttempts++;

    // Implement comprehensive recovery logic
    bool recoverySuccess = _executeRecovery(user, positionId);

    if (recoverySuccess) {
        position.status = PositionStatus.ACTIVE;
        emit RecoverySuccess(user, positionId, position.recoveryAttempts);
    } else {
        position.status = PositionStatus.STUCK;

        // Escalate to emergency if max attempts reached
        if (position.recoveryAttempts >= MAX_RECOVERY_ATTEMPTS) {
            _escalateToEmergency(user, positionId);
            emit RecoveryEscalated(user, positionId);
        } else {
            emit RecoveryFailed(user, positionId, position.recoveryAttempts);
        }
    }
}

function _executeRecovery(
    address user,
    uint256 positionId
) internal returns (bool success) {
    // Validate recovery preconditions
    require(user != address(0), "Invalid user");

    try this._attemptPositionRecovery(user, positionId) {
        // Verify recovery success
        return _validateRecoverySuccess(user, positionId);
    } catch Error(string memory reason) {
        emit RecoveryError(user, positionId, reason);
        return false;
    } catch {
        emit RecoveryError(user, positionId, "Unknown recovery error");
        return false;
    }
}

// System health monitoring
struct SystemHealth {
    uint256 totalValueLocked;
    uint256 activePositions;
    uint256 averageHealthFactor;
    uint256 flashLoanUtilization;
    uint256 lastOracleUpdate;
}

function monitorSystemHealth() external view returns (SystemHealth memory) {
    return SystemHealth({
        totalValueLocked: getTVL(),
        activePositions: getActivePositionCount(),
        averageHealthFactor: getAverageHealthFactor(),
        flashLoanUtilization: globalFlashLoanUsage * 100 / MAX_FLASH_LOAN_AMOUNT,
        lastOracleUpdate: lastOracleUpdateTime
    });
}

Security Testing Framework

Automated Testing

Comprehensive test suite covering:

Flash loan security validation
Health factor calculations
Liquidation protection mechanisms
Emergency procedures

Contract Specifications

interface SecuritySpecs {
  readonly maxLeverage: 5;
  readonly maxLTV: 0.8;
  readonly liquidationThreshold: 0.8;
  readonly emergencyPause: true;
  readonly timelockDuration: 48 * 3600; // 48 hours
  readonly priceDeviationLimit: 0.05; // 5%
}

Contract Addresses:

Testnet: Coming Soon
Mainnet: In Development

Security Audit Status: In progress with Trail of Bits, Consensys Diligence Bug Bounty: $100,000 program launching with mainnet deployment Emergency Contact: security@loopify.finance

Core Security Principles​

Smart Contract Security​

Access Control & Role Management​

Flash Loan Security​

Health Factor Monitoring​

Operational Security​

Circuit Breakers & Emergency Controls​

Oracle Security​

Runtime Security Monitoring​

Automated Monitoring​

Enhanced Recovery System​

Security Testing Framework​

Automated Testing​

Contract Specifications​