GovernanceToken

Scope

• Contract: GovernanceToken.sol

• Version: v1

• Framework: OpenZeppelin Contracts Upgradeable v5

Executive Summary

The Lendefi DAO Governance Token contract has been audited following the implementation of standardized security patterns across the ecosystem. The contract exhibits strong security fundamentals with an enhanced role-based access control system, timelocked upgrade procedures, proper supply management, and secure bridge functionality. No critical vulnerabilities were identified. Recent role reassignments have significantly reduced centralization risks.

Key Findings

Severity	Number of Findings
Critical	0
High	0
Medium	0
Low	1
Informational	4

Risk Assessment

Role-Based Access Control ✅

The contract implements a comprehensive role-based access control system with carefully revised role assignments to reduce centralization:

• DEFAULT_ADMIN_ROLE → timelock controller

• TGE_ROLE → guardian (limited to initial token distribution)

• PAUSER_ROLE → timelock controller (previously assigned to guardian)

• UPGRADER_ROLE → timelock controller

• MANAGER_ROLE → timelock controller

• BRIDGE_ROLE → assigned by manager

These role assignments follow the principle of least privilege with improved security by moving critical functions like pausing from individual control (guardian) to decentralized governance (timelock). This significantly reduces centralization risks by ensuring critical contract actions require broader consensus through the governance process.

Upgrade Security ✅

The contract implements the standardized timelocked upgrade pattern:

struct UpgradeRequest {
    address implementation;
    uint64 scheduledTime;
    bool exists;
}

The upgrade process follows a secure three-step workflow with a 3-day timelock:

1. Schedule upgrade (with implementation address)

2. Wait for timelock period

3. Execute upgrade with verification

By limiting the UPGRADER_ROLE to the timelock controller exclusively, upgrades now require community governance approval rather than being controlled by a privileged entity, further enhancing decentralization.

Token Supply Management ✅

The contract enforces supply constraints with a fixed initial supply of 50,000,000 tokens:

• Treasury allocation: 27,400,000 tokens (54.8%)

• Ecosystem allocation: 22,000,000 tokens (44%)

• Deployer allocation: 600,000 tokens (1.2%)

The contract prevents inflation through:

• Fixed initial supply limit

• Bridge mint restrictions

• Supply cap validation on all minting operations

Bridge Security ✅

The bridge functionality is well-protected:

• Maximum bridge amount is limited to 5,000 tokens per transaction (reduced from 20,000)

• Bridge role is explicitly assigned by management through timelock governance

• Bridge operations are pausable via timelock-controlled pause mechanism

• Bridge transactions cannot exceed total supply

• Bridge limit is configurable by MANAGER_ROLE (timelock-controlled)

Detailed Findings

Low Severity

1. Bridge Amount Upper Bound

   While the updateMaxBridgeAmount function has a cap of 1% of initial supply, this might still be a large amount (500,000 tokens) that could potentially create market volatility if exploited.

   Recommendation: Consider implementing a more granular upper limit or requiring a higher permission level for setting large bridge limits.

Informational

1. Two-Step Initialization Pattern

   The contract uses a two-step initialization process (initializeUUPS followed by initializeTGE). While this is a valid pattern, it requires careful handling during deployment to ensure both steps are completed correctly.

2. Limited Deployer Share

   The deployer receives only 1.2% of the token supply. This promotes decentralization and reduces founder control, aligning with best practices for governance tokens.

3. Receive Function Revert

   The receive function explicitly reverts with "NO_ETHER_ACCEPTED". While this prevents accidental ETH sends, it may cause confusion for users who accidentally send ETH to the token.

4. Voting Power Tracking

   The contract uses OpenZeppelin's ERC20Votes which handles checkpoints correctly, but there's no mention of minimum voting power requirements or time locks for voting power, which might be relevant for governance.

Conclusion

The GovernanceToken contract demonstrates strong adherence to the standardized security patterns established for the Lendefi DAO ecosystem. The recent role reassignments have significantly improved the decentralization profile of the contract by shifting critical functions from individual control to governance-controlled mechanisms. The implementation of role-based access control, timelocked upgrades, secure bridge functionality, and comprehensive supply management provides a robust security foundation.

The contract successfully implements all required security patterns with enhanced decentralization:

1. ✅ Improved role management with proper separation of concerns and reduced centralization

2. ✅ Timelocked upgrades with appropriate checks and governance oversight

3. ✅ Supply constraints to prevent inflation

4. ✅ Secure bridge functionality with proper limitations and reduced maximum amounts

5. ✅ Comprehensive input validation

No critical or high severity issues were identified. The minor issues noted do not compromise the security of the contract and can be addressed in future updates if desired.