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Liquity Process Quality Review
Score: 96%

Overview

This is a Process Quality Review of Liquity completed on May 31st 2021. It was performed using the Process Review process (version 0.7) and is documented here. The review was performed by Nic of DeFiSafety. Check out our Telegram.
The final score of the review is 96%, a PASS. The breakdown of the scoring is in Scoring Appendix. For our purposes, a pass is 70%.

Summary of the Process

Very simply, the review looks for the following declarations from the developer's site. With these declarations, it is reasonable to trust the smart contracts.
    Here are my smart contracts on the blockchain
    Here is the documentation that explains what my smart contracts do
    Here are the tests I ran to verify my smart contract
    Here are the audit(s) performed on my code by third party experts
    Here are the admin controls and strategies

Disclaimer

This report is for informational purposes only and does not constitute investment advice of any kind, nor does it constitute an offer to provide investment advisory or other services. Nothing in this report shall be considered a solicitation or offer to buy or sell any security, token, future, option or other financial instrument or to offer or provide any investment advice or service to any person in any jurisdiction. Nothing contained in this report constitutes investment advice or offers any opinion with respect to the suitability of any security, and the views expressed in this report should not be taken as advice to buy, sell or hold any security. The information in this report should not be relied upon for the purpose of investing. In preparing the information contained in this report, we have not taken into account the investment needs, objectives and financial circumstances of any particular investor. This information has no regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this information and investments discussed may not be suitable for all investors.
Any views expressed in this report by us were prepared based upon the information available to us at the time such views were written. The views expressed within this report are limited to DeFiSafety and the author and do not reflect those of any additional or third party and are strictly based upon DeFiSafety, its authors, interpretations and evaluation of relevant data. Changed or additional information could cause such views to change. All information is subject to possible correction. Information may quickly become unreliable for various reasons, including changes in market conditions or economic circumstances.
This completed report is copyright (c) DeFiSafety 2021. Permission is given to copy in whole, retaining this copyright label.

Chain

This section indicates the blockchain used by this protocol.
Chain: Ethereum
Guidance: Ethereum Binance Smart Chain Polygon Terra Avalanche Celo Solana

Code and Team

This section looks at the code deployed on the Mainnet that gets reviewed and its corresponding software repository. The document explaining these questions is here. This review will answer the questions;
1) Are the executing code addresses readily available? (%) 2) Is the code actively being used? (%) 3) Is there a public software repository? (Y/N) 4) Is there a development history visible? (%) 5) Is the team public (not anonymous)? (Y/N)

1) Are the executing code addresses readily available? (%)

Answer: 100%
They are available at website https://docs.liquity.org/documentation/resources#contract-addresses, as indicated in the Appendix.
Guidance: 100% Clearly labelled and on website, docs or repo, quick to find 70% Clearly labelled and on website, docs or repo but takes a bit of looking 40% Addresses in mainnet.json, in discord or sub graph, etc 20% Address found but labeling not clear or easy to find 0% Executing addresses could not be found

2) Is the code actively being used? (%)

Answer: 100%
Activity is 250 transactions a day on contract LQTYStaking.sol, as indicated in the Appendix.

Guidance:

100% More than 10 transactions a day 70% More than 10 transactions a week 40% More than 10 transactions a month 10% Less than 10 transactions a month 0% No activity

3) Is there a public software repository? (Y/N)

Answer: Yes
Is there a public software repository with the code at a minimum, but normally test and scripts also (Y/N). Even if the repo was created just to hold the files and has just 1 transaction, it gets a Yes. For teams with private repos, this answer is No.

4) Is there a development history visible? (%)

Answer: 100%
With 2737 commits and 42 branches, this is a robust software repo.
This checks if the software repository demonstrates a strong steady history. This is normally demonstrated by commits, branches and releases in a software repository. A healthy history demonstrates a history of more than a month (at a minimum).
Guidance: 100% Any one of 100+ commits, 10+branches 70% Any one of 70+ commits, 7+branches 50% Any one of 50+ commits, 5+branches 30% Any one of 30+ commits, 3+branches 0% Less than 2 branches or less than 10 commits

5) Is the team public (not anonymous)? (Y/N)

Answer: Yes
Team members' identities are all public at https://www.liquity.org/team.
For a yes in this question the real names of some team members must be public on the website or other documentation. If the team is anonymous and then this question is a No.

Documentation

This section looks at the software documentation. The document explaining these questions is here.
Required questions are;
6) Is there a whitepaper? (Y/N) 7) Are the basic software functions documented? (Y/N) 8) Does the software function documentation fully (100%) cover the deployed contracts? (%) 9) Are there sufficiently detailed comments for all functions within the deployed contract code (%) 10) Is it possible to trace from software documentation to the implementation in code (%)

6) Is there a whitepaper? (Y/N)

Answer: Yes
Location: At the bottom of https://github.com/liquity/dev.

7) Are the basic software functions documented? (Y/N)

Answer: Yes
There is robust software function documentation at https://github.com/liquity/dev#public-user-facing-functions.

8) Does the software function documentation fully (100%) cover the deployed contracts? (%)

Answer: 100%
All of the Liquity smart contracts have their software functions detailed in depth at https://github.com/liquity/beta/blob/main/README.md#core-smart-contracts.
Guidance:
100% All contracts and functions documented 80% Only the major functions documented 79-1% Estimate of the level of software documentation 0% No software documentation

9) Are there sufficiently detailed comments for all functions within the deployed contract code (%)

Answer: 31%
Code examples are in the Appendix. As per the SLOC, there is 31% commenting to code (CtC).
The Comments to Code (CtC) ratio is the primary metric for this score.
Guidance: 100% CtC > 100 Useful comments consistently on all code 90-70% CtC > 70 Useful comment on most code 60-20% CtC > 20 Some useful commenting 0% CtC < 20 No useful commenting

How to improve this score

This score can improve by adding comments to the deployed code such that it comprehensively covers the code. For guidance, refer to the SecurEth Software Requirements.

10) Is it possible to trace from software documentation to the implementation in code (%)

Answer: 100%
Clear traceability between software documentation and code implementation in https://github.com/liquity/dev#public-user-facing-functions.
Guidance: 100% Clear explicit traceability between code and documentation at a requirement level for all code 60% Clear association between code and documents via non explicit traceability 40% Documentation lists all the functions and describes their functions 0% No connection between documentation and code

Testing

This section looks at the software testing available. It is explained in this document. This section answers the following questions;
11) Full test suite (Covers all the deployed code) (%) 12) Code coverage (Covers all the deployed lines of code, or explains misses) (%) 13) Scripts and instructions to run the tests (Y/N) 14) Report of the results (%) 15) Formal Verification test done (%) 16) Stress Testing environment (%)

11) Is there a Full test suite? (%)

Answer: 100%
Code examples are in the Appendix. As per the SLOC, there is 287% test per code (TtC).
This score is guided by the Test to Code ratio (TtC). Generally a good test to code ratio is over 100%. However the reviewers best judgement is the final deciding factor.
Guidance: 100% TtC > 120% Both unit and system test visible 80% TtC > 80% Both unit and system test visible 40% TtC < 80% Some tests visible 0% No tests obvious

12) Code coverage (Covers all the deployed lines of code, or explains misses) (%)

Answer: 98%
There is an indication of code coverage in the README.md of their main GitHub repository at https://github.com/liquity/dev#coverage.
Guidance: 100% Documented full coverage 99-51% Value of test coverage from documented results 50% No indication of code coverage but clearly there is a reasonably complete set of tests 30% Some tests evident but not complete 0% No test for coverage seen

13) Scripts and instructions to run the tests (Y/N)

Answer: Yes
Test instructions are available at https://github.com/liquity/dev#running-tests.

14) Report of the results (%)

Answer: 100%
A fully detailed Liquity test report is available at https://github.com/liquity/dev/blob/main/packages/contracts/test-report.md.
Guidance: 100% Detailed test report as described below 70% GitHub Code coverage report visible 0% No test report evident

15) Formal Verification test done (%)

Answer: 0%
No Formal Verification test of Liquity was found.

16) Stress Testing environment (%)

Answer: 100%

Security

This section looks at the 3rd party software audits done. It is explained in this document. This section answers the following questions;
17) Did 3rd Party audits take place? (%) 18) Is the bounty value acceptably high?

17) Did 3rd Party audits take place? (%)

Answer: 100%
Liquity was launched April 5th 2021
Guidance: 100% Multiple Audits performed before deployment and results public and implemented or not required 90% Single audit performed before deployment and results public and implemented or not required 70% Audit(s) performed after deployment and no changes required. Audit report is public 20% No audit performed 0% Audit Performed after deployment, existence is public, report is not public and no improvements deployed OR smart contract address' not found, question

18) Is the bounty value acceptably high (%)

Answer: 70%
Liquity's bug bounty program is as low as $500, and as high as $250,000.
Guidance:
100% Bounty is 10% TVL or at least $1M AND active program (see below) 90% Bounty is 5% TVL or at least 500k AND active program 80% Bounty is 5% TVL or at least 500k 70% Bounty is 100k or over AND active program 50% Bounty is 100k or over 40% Bounty is 50k or over 20% Bug bounty program bounty is less than 50k 0% No bug bounty program offered
Active program means a third party actively driving hackers to the site. Inactive program would be static mention on the docs.

Access Controls

This section covers the documentation of special access controls for a DeFi protocol. The admin access controls are the contracts that allow updating contracts or coefficients in the protocol. Since these contracts can allow the protocol admins to "change the rules", complete disclosure of capabilities is vital for user's transparency. It is explained in this document. The questions this section asks are as follow;
19) Can a user clearly and quickly find the status of the admin controls? 20) Is the information clear and complete? 2`) Is the information in non-technical terms that pertain to the investments? 22) Is there Pause Control documentation including records of tests?

19) Can a user clearly and quickly find the status of the admin controls (%)

Answer: 100%
Guidance: 100% Clearly labelled and on website, docs or repo, quick to find 70% Clearly labelled and on website, docs or repo but takes a bit of looking 40% Access control docs in multiple places and not well labelled 20% Access control docs in multiple places and not labelled 0% Admin Control information could not be found

20) Is the information clear and complete (%)

Answer: 100%
Guidance: All the contracts are immutable -- 100% OR All contracts are clearly labelled as upgradeable (or not) -- 30% AND The type of ownership is clearly indicated (OnlyOwner / MultiSig / Defined Roles) -- 30% AND The capabilities for change in the contracts are described -- 30%

21) Is the information in non-technical terms that pertain to the investments (%)

Answer: 100%
Guidance: 100% All the contracts are immutable 90% Description relates to investments safety and updates in clear, complete non-software l language 30% Description all in software specific language 0% No admin control information could not be found

22) Is there Pause Control documentation including records of tests (%)

Answer: 100%
All contracts are automated and immutable upon launch, but no evidence of Pause Control or similar function.
Note: They do have something called "Recovery Mode" which may be relevant to this section.
Guidance: 100% All the contracts are immutable or no pause control needed and this is explained OR 100% Pause control(s) are clearly documented and there is records of at least one test within 3 months 80% Pause control(s) explained clearly but no evidence of regular tests 40% Pause controls mentioned with no detail on capability or tests 0% Pause control not documented or explained

Appendices

Author Details

The author of this review is Rex of DeFi Safety.
Email : [email protected] Twitter : @defisafety
I started with Ethereum just before the DAO and that was a wonderful education. It showed the importance of code quality. The second Parity hack also showed the importance of good process. Here my aviation background offers some value. Aerospace knows how to make reliable code using quality processes.
I was coaxed to go to EthDenver 2018 and there I started SecuEth.org with Bryant and Roman. We created guidelines on good processes for blockchain code development. We got EthFoundation funding to assist in their development.
Process Quality Reviews are an extension of the SecurEth guidelines that will further increase the quality processes in Solidity and Vyper development.
DeFiSafety is my full time gig and we are working on funding vehicles for a permanent staff.

Scoring Appendix

Executing Code Appendix

Code Used Appendix

Example Code Appendix

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// SPDX-License-Identifier: MIT
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pragma solidity 0.6.11;
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import "../Dependencies/BaseMath.sol";
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import "../Dependencies/SafeMath.sol";
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import "../Dependencies/Ownable.sol";
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import "../Dependencies/CheckContract.sol";
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import "../Dependencies/console.sol";
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import "../Interfaces/ILQTYToken.sol";
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import "../Interfaces/ILQTYStaking.sol";
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import "../Dependencies/LiquityMath.sol";
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import "../Interfaces/ILUSDToken.sol";
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contract LQTYStaking is ILQTYStaking, Ownable, CheckContract, BaseMath {
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using SafeMath for uint;
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// --- Data ---
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string constant public NAME = "LQTYStaking";
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mapping( address => uint) public stakes;
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uint public totalLQTYStaked;
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uint public F_ETH; // Running sum of ETH fees per-LQTY-staked
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uint public F_LUSD; // Running sum of LQTY fees per-LQTY-staked
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// User snapshots of F_ETH and F_LUSD, taken at the point at which their latest deposit was made
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mapping (address => Snapshot) public snapshots;
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struct Snapshot {
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uint F_ETH_Snapshot;
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uint F_LUSD_Snapshot;
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}
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ILQTYToken public lqtyToken;
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ILUSDToken public lusdToken;
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address public troveManagerAddress;
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address public borrowerOperationsAddress;
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address public activePoolAddress;
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// --- Events ---
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event LQTYTokenAddressSet(address _lqtyTokenAddress);
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event LUSDTokenAddressSet(address _lusdTokenAddress);
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event TroveManagerAddressSet(address _troveManager);
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event BorrowerOperationsAddressSet(address _borrowerOperationsAddress);
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event ActivePoolAddressSet(address _activePoolAddress);
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event StakeChanged(address indexed staker, uint newStake);
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event StakingGainsWithdrawn(address indexed staker, uint LUSDGain, uint ETHGain);
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event F_ETHUpdated(uint _F_ETH);
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event F_LUSDUpdated(uint _F_LUSD);
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event TotalLQTYStakedUpdated(uint _totalLQTYStaked);
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event EtherSent(address _account, uint _amount);
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event StakerSnapshotsUpdated(address _staker, uint _F_ETH, uint _F_LUSD);
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// --- Functions ---
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SLOC Appendix

Solidity Contracts

Language
Files
Lines
Blanks
Comments
Code
Complexity
Solidity
83
12383
2408
2364
7611
551
Comments to Code 2364/7611 = 31%

Javascript Tests

Language
Files
Lines
Blanks
Comments
Code
Complexity
JavaScript
33
36360
8389
6096
21875
298
Tests to Code 21875/7611 = 287%
Last modified 23d ago