GHSA-725G-W329-G7QR

When a user pays transaction fees using a Token-2022 token with a TransferFeeConfig extension, Kora's verify_token_payment() credits the full raw transfer amount as the payment value. However, the on-chain SPL Token-2022 program withholds a portion of that amount as a transfer fee, so the paymaster's destination account only receives amount - transfer_fee. This means the paymaster consistently credits more value than it actually receives, resulting in systematic financial loss.

Severity

High

Affected Component

• File: crates/lib/src/token/token.rs
• Function: verify_token_payment()
• Lines: 529–654 (specifically 633–639)

Root Cause

In verify_token_payment(), the amount extracted from the parsed SPL transfer instruction is the pre-fee amount (what the sender specifies in the transfer_checked instruction). The function passes this raw amount to calculate_token_value_in_lamports() to determine how many lamports the payment is worth. It never subtracts the Token-2022 transfer fee.

The fee estimation path (fee.rs:analyze_payment_instructions) correctly accounts for transfer fees by calculating them and adding them to the total fee. But the verification path does not perform the inverse subtraction, creating an asymmetry.

Vulnerable Code

// crates/lib/src/token/token.rs:529-654
pub async fn verify_token_payment(
    transaction_resolved: &mut VersionedTransactionResolved,
    rpc_client: &RpcClient,
    required_lamports: u64,
    expected_destination_owner: &Pubkey,
) -> Result<bool, KoraError> {
    let config = get_config()?;
    let mut total_lamport_value = 0u64;

    // ...

    for instruction in transaction_resolved
        .get_or_parse_spl_instructions()?
        .get(&ParsedSPLInstructionType::SplTokenTransfer)
        .unwrap_or(&vec![])
    {
        if let ParsedSPLInstructionData::SplTokenTransfer {
            source_address,
            destination_address,
            mint,
            amount,      // <-- This is the PRE-FEE amount from the instruction
            is_2022,
            ..
        } = instruction
        {
            // ... destination validation ...

            // LINE 633-639: Uses raw *amount without deducting transfer fee
            let lamport_value = TokenUtil::calculate_token_value_in_lamports(
                *amount,        // <-- BUG: Should be (amount - transfer_fee)
                &token_mint,
                config.validation.price_source.clone(),
                rpc_client,
            )
            .await?;

            total_lamport_value = total_lamport_value
                .checked_add(lamport_value)
                .ok_or_else(|| {
                    KoraError::ValidationError("Payment accumulation overflow".to_string())
                })?;
        }
    }

    Ok(total_lamport_value >= required_lamports)
}

For comparison, the transfer fee calculation exists elsewhere in the codebase and is used during fee estimation:

// crates/lib/src/token/spl_token_2022.rs:165-198
pub fn calculate_transfer_fee(
    &self,
    amount: u64,
    current_epoch: u64,
) -> Result<Option<u64>, KoraError> {
    if let Some(fee_config) = self.get_transfer_fee() {
        let transfer_fee = if current_epoch >= u64::from(fee_config.newer_transfer_fee.epoch) {
            &fee_config.newer_transfer_fee
        } else {
            &fee_config.older_transfer_fee
        };
        let basis_points = u16::from(transfer_fee.transfer_fee_basis_points);
        let maximum_fee = u64::from(transfer_fee.maximum_fee);
        let fee_amount = (amount as u128)
            .checked_mul(basis_points as u128)
            .and_then(|product| product.checked_div(10_000))
            // ...
        Ok(Some(std::cmp::min(fee_amount, maximum_fee)))
    } else {
        Ok(None)
    }
}

This function exists but is never called in verify_token_payment().

Proof of Concept

Arithmetic Demonstration

Given:

• Token-2022 token with 5% transfer fee (500 basis points), whitelisted in allowed_spl_paid_tokens
• Transaction fee cost: 5000 lamports equivalent
• Token price: 1 token = 5 lamports

What should happen:

• User needs to pay 5000 lamports worth → 1000 tokens
• Transfer fee on 1000 tokens at 5% = 50 tokens
• Paymaster destination receives: 1000 - 50 = 950 tokens (worth 4750 lamports)
• User should be required to pay MORE to cover the fee

What actually happens:

• User sends transfer_checked for amount = 1000 tokens
• verify_token_payment() calculates: 1000 tokens * 5 lamports/token = 5000 lamports
• 5000 >= 5000 required → payment verified as sufficient
• But paymaster only received 950 tokens (worth 4750 lamports)
• Paymaster lost 250 lamports on this transaction

Over 1000 transactions: Paymaster loses 250,000 lamports (0.25 SOL)

Runnable Test (using existing test infrastructure)

#[tokio::test]
async fn test_token2022_transfer_fee_not_deducted_in_verification() {
    // Setup: Token-2022 mint with 10% transfer fee (1000 bps)
    let transfer_fee_config = create_transfer_fee_config(
        1000,      // 10% basis points
        u64::MAX,  // no maximum fee cap
    );

    let mint_pubkey = Pubkey::new_unique();
    let mint_account = MintAccountMockBuilder::new()
        .with_decimals(6)
        .with_supply(1_000_000_000_000)
        .with_extension(ExtensionType::TransferFeeConfig)
        .build_token2022();

    // User sends transfer_checked for 1,000,000 tokens (1 token at 6 decimals)
    let transfer_amount: u64 = 1_000_000;

    // What verify_token_payment credits:
    let credited_amount = transfer_amount;  // = 1,000,000

    // What the paymaster actually receives (after 10% on-chain fee):
    let actual_received = transfer_amount - (transfer_amount * 1000 / 10000);  // = 900,000

    // BUG: credited_amount (1,000,000) > actual_received (900,000)
    // Paymaster is credited 11.1% MORE than it actually receives
    assert!(credited_amount > actual_received);
    assert_eq!(credited_amount - actual_received, 100_000); // 100,000 token units lost

    // The financial loss per transaction = 10% of the payment amount
    // This is NOT a rounding error, it is a full percentage-based loss
}

References

• crates/lib/src/token/token.rs:529-654, verify_token_payment() using raw amount
• crates/lib/src/token/spl_token_2022.rs:165-198, calculate_transfer_fee() (exists but not called in verification)
• crates/lib/src/fee/fee.rs:174-204, analyze_payment_instructions() (correctly accounts for transfer fee in estimation)
• SPL Token-2022 specification: transfer fees are deducted from the transfer amount by the on-chain program