Cheery Rusty Marmot
Medium
The absence of rate limiting on minting and burning operations allows malicious actors to artificially inflate or deflate token supply, potentially enabling market manipulation and causing significant price volatility.
https://github.com/sherlock-audit/2024-11-telcoin/blob/main/telcoin-audit/contracts/stablecoin/Stablecoin.sol#L1-L156 This vulnerability arises due to the lack of mechanism to control the frequency of amount of tokens that can be minted (created) or burned (destroyed) within a specified timeframe therefore allowing unregulated changes to the token supply that impact its value in the market.
- No restrictions or limits on the frequency or volume of tokens that can be minted or burned in a single transaction.
- Lack of automated mechanisms to adjust the supply to maintain peg stability in response to fluctuating market conditions.
No response
- Monitor on-chain activity for token price fluctuations and identify opportunities to exploit the mint/burn operations.
- Rapidly mint a large volume of tokens to artificially increase supply, potentially leading to a price drop due to a supply shock.
- Conduct profitable trades based on the manipulated price point to exploit price differentials.
- Burn tokens after trade completion to restore the supply, stabilizing the token price at the attacker's discretion.
Increased market volatility due to erratic supply adjustments, destabilizing the token's value.
No response
Enforce supply peg mechanisms or stability algorithms to prevent substantial price deviation from an anchor asset (e.g., fiat currency).