Security Audit Report for HertzFlow's Perp Contracts

The target of this audit is the private code repository of Perp Contracts of HertzFlow. The Perp Contracts of HertzFlow is a perpetual exchange forked from GMX Synthetics v2.3-branch. It implements the Zero Funding Position (i.e., ZFP) feature, enabling ultra high leverage trading (e.g., 75x to 555x). Unlike normal positions that charge position fees, ZFP positions replace fees with a kink model profit extraction mechanism where the protocol takes a portion of profits based on ROI tiers, with higher ROI yielding more favorable user keep ratios. To support the ZFP feature safely, the project introduces several mechanisms. Specifically, a collateral range check (i.e., willBeSufficient and willBeTooMuch) is implemented for all ZFP positions to ensure their validity after the corresponding operations (e.g., position decrease). Additionally, an Early Force Liquidation (i.e., EFL) feature is implemented to forcibly close positions with excessive profits to protect liquidity providers.

Please refer to the report for the detailed audit scope.

Our audit methodology employs automated vulnerability scans, manual verification, and business logic analysis to uncover potential security issues coupled with gas and code quality optimization recommendations.

In summary, we have found that the codebase contains 3 high-risk issues that require prompt attention. In addition, we have identified other non-critical issues as well as recommendations and notes that should be considered. The Perp Contracts team has addressed these issues promptly. It is important to note that our audit covers only the final reported versions of the codebase. Any subsequent updates would require a re-evaluation.