Shadow Arena #014: Raft Finance

Raft was the closest real-world Liquity V1 fork shipped in production — a true PositionManager / R-stablecoin / liquidation architecture, but with stETH (and later cbETH, wstETH) as collateral instead of plain ETH. It was audited by Hats Finance in a May 2023 competition (3 H + 4 M + 11 L) and by Trail of Bits in parallel. Then in November 2023 it was exploited for ~$6.7M worth of unbacked R via a share-rounding bug in the indexed collateral-share token that neither audit caught. This entry is the rare case where the most important lesson is what the audits did NOT find. We give you the pre-exploit audit findings to hunt first — multi-collateral redemption asymmetries, oracle deviation math, self-redemption debt drift, leverage-router collateral leaks. Find them, score them, build the auditor mindset. Then we give you a separate post-exploit tier: the precision bug that actually drained the protocol, with full forensic walkthrough of the rounding direction, the index-manipulation primitive, and the donate-and-liquidate setup the attacker used. The framing is not 'the auditors missed it, here's the gotcha.' Hats Finance and Trail of Bits are both serious firms, and share-rounding bugs against an attacker-controlled index are one of the hardest classes of CDP bug to catch — Balancer, Onyx, and several other protocols have lost funds to the same arithmetic shape. The framing is: you've just built the Liquity V1 share/index math in Section 12 of the Build module; here is what happens when that math is reused with the wrong rounding direction in a multi-collateral fork. Test the boundary case yourself.

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