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Lucky Peach Barbel

Medium

Incorrect Single-Sided Position Validation Leading to Potential State Corruption

The validate function includes a check to ensure that positions are single-sided (i.e either entirely maker or taker, but not both). However, the logic is flawed in the following snippet:

        if (!updateContext.currentPositionLocal.singleSided()) revert IMarket.MarketNotSingleSidedError();

        if (
            (!context.latestPositionLocal.maker.isZero() && !updateContext.currentPositionLocal.skew().isZero()) ||
            (!context.latestPositionLocal.skew().isZero() && !updateContext.currentPositionLocal.maker.isZero())
        ) revert IMarket.MarketNotSingleSidedError();

The issue arises because the second condition redundantly checks the same state as the first condition (updateContext.currentPositionLocal.singleSided()). Additionally, the validation does not account for pending positions (context.pendingLocal), which could result in a state where the current position appears single-sided, but the pending position introduces a mixed state (both maker and taker). This oversight could allow a position to transition into an invalid mixed state during execution.

Impact:

System could allow positions to become mixed (both maker and taker), violating the single-sided invariant. This could lead to incorrect margin calculations, unfair liquidations, or other unintended behaviors that compromise the integrity of the market.

Mitigation:

Update the validation logic to include pending positions and ensure the single-sided invariant is enforced holistically.