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Security & How Your Funds Are Protected

Understanding SynthOS security architecture and protection mechanisms

Security & How Your Funds Are Protected

SynthOS is designed with security and transparency first. This guide explains how your funds are protected and what security measures are in place.

Non-Custodial Architecture

You Always Control Your Assets

What this means:

  • Only you can deposit, withdraw, or allocate funds
  • Your private keys never leave your wallet
  • SynthOS smart contracts are proxies, not custodians
  • No admin backdoors to access user vaults

How it works:

Traditional Finance:
You → Bank (holds your money) → Investments
Risk: Bank can freeze, lose, or misuse your funds

SynthOS:
You → Your Vault (you control) → Yield Strategies
Risk: Only smart contract risk, no custodial risk

Your permissions:

  • Deposit assets to your vault
  • Allocate funds to strategies
  • Withdraw from positions
  • Withdraw from vault to wallet
  • Recover stuck ETH

SynthOS CANNOT:

  • Withdraw your funds
  • Move your assets without approval
  • Freeze your vault
  • Block your withdrawals
  • Access your private keys

Smart Contract Security

Audited Contracts

Audit status:

  • Core smart contracts audited by independent security firms
  • Audit reports publicly available (link to audits)
  • Critical vulnerabilities fixed before mainnet launch
  • Regular re-audits when significant changes are made

What auditors check:

  • Reentrancy vulnerabilities
  • Access control issues
  • Integer overflow/underflow
  • Front-running risks
  • Gas optimization
  • Logic errors

Audit reports:

  • Available in Audits & Bug Bounty
  • Includes severity ratings and remediation status
  • Updated with each new audit

Beacon Proxy Pattern

What it is:

  • Upgradeable smart contract architecture
  • All vaults point to a single implementation
  • Upgrades improve all vaults simultaneously
  • Your vault address never changes

Security benefits:

  • Quick security patches without user action
  • No need to migrate funds during upgrades
  • All users benefit from improvements
  • Reduced attack surface (single implementation)

Upgrade safety:

  • 1-day minimum delay enforced by contract
  • Upgrades cannot access or move user funds
  • All storage (your positions) preserved across upgrades
  • Announcement 24+ hours in advance

Example upgrade process:

Day 1: Admin proposes upgrade (security patch)
Day 2: Timelock period (community review)
Day 3: Upgrade executed
Result: All vaults use new logic, funds untouched

Reentrancy Guards

What they protect against:

  • Malicious contracts calling back into your vault
  • Recursive withdrawals draining funds
  • State manipulation attacks

How they work:

// Simplified example
function withdraw() external nonReentrant {
    // Prevents recursive calls
    uint amount = userBalance[msg.sender];
    userBalance[msg.sender] = 0;  // Update state first
    msg.sender.transfer(amount);   // Then transfer
}

Coverage:

  • All deposit functions
  • All withdrawal functions
  • All allocation functions
  • Cross-chain operations

Whitelisted Tokens

What this means:

  • Only approved assets can be deposited
  • Prevents malicious token attacks
  • Reduces smart contract risk

Current whitelist:

  • USDC (Circle's stablecoin)
  • USDT (Tether stablecoin)
  • ETH (Native ether)
  • WETH (Wrapped ether)

Why whitelist?

  • Prevents fake token deposits
  • Avoids tokens with malicious code
  • Ensures liquidity for withdrawals
  • Simplifies accounting and tracking

Adding new tokens:

  • Requires governance approval
  • Security review of token contract
  • Liquidity analysis
  • Community discussion

Slippage Protection

Built into all operations:

  • Cross-chain deposits
  • Cross-chain withdrawals
  • Token swaps
  • Bridge operations

How it protects you:

You set: 1% maximum slippage
Expected: 1,000 USDC → 950 aUSDC
Minimum: 940.5 aUSDC (1% below expected)

If actual < 940.5 aUSDC:
    No Transaction reverts
    Funds returned to your vault
    Only lose gas fees (~$0.05)

Protection against:

  • Unfavorable exchange rates
  • Bridge fee spikes
  • Market volatility
  • Low liquidity conditions

Validator Trust Model

What the Validator Can Do

Monitor operations:

  • Watch LayerZero for message delivery
  • Confirm deposits completed successfully
  • Confirm withdrawals completed successfully
  • Detect failed or stuck operations

Update vault state:

  • Mark deposits as "Confirmed" when complete
  • Mark withdrawals as "Completed" when funds return
  • Mark operations as "Failed" to trigger refunds

Trigger refunds:

  • If bridge operation fails
  • If destination protocol rejects deposit
  • If operation stuck for 24+ hours

What the Validator CANNOT Do

Cannot access funds:

  • No private keys or withdrawal permissions
  • Cannot move assets from your vault
  • Cannot withdraw on your behalf
  • Cannot bypass slippage protection

Cannot create fake positions:

  • Cannot mark deposit as complete without actual receipt tokens
  • Cannot inflate your balance
  • Cannot modify position amounts arbitrarily

Cannot prevent withdrawals:

  • Cannot block your withdrawal requests
  • Cannot freeze your vault
  • Cannot override your permissions

Validator Transparency

On-chain verification:

  • Validator address is public in UserVaultManager contract
  • All validator actions recorded on-chain
  • You can verify confirmations independently
  • Transaction hashes provided for every action

Example verification:

1. Check LayerZero Scan for message delivery
2. Verify destination transaction on block explorer
3. Confirm vault update transaction on Scroll
4. All three should match your operation

Trust model:

  • Validator is a notary, not a custodian
  • Worst case: Delays in confirmation (not loss of funds)
  • Backup validators available if primary fails
  • Community can run independent validators (coming soon)

Bridge Security

LayerZero Integration

Why LayerZero:

  • Industry-standard cross-chain messaging protocol
  • Used by 100+ protocols with $billions in volume
  • Audited by multiple security firms
  • Battle-tested across thousands of operations

Security features:

  • Message verification on both chains
  • Relayer decentralization
  • Configurable security levels
  • Automatic retry mechanisms

How it protects you:

Step 1: Your vault sends message on Scroll
Step 2: LayerZero relayers verify and transmit
Step 3: Destination chain receives and validates
Step 4: Only then does your vault update

If any step fails → Automatic refund

Bridge Operation Verification

Every bridge operation:

  1. Recorded on source chain (Scroll)
  2. Transmitted via LayerZero
  3. Confirmed on destination chain
  4. Verified by validator
  5. Updated in your vault

Verification points:

  • Transaction hash on source chain
  • LayerZero message GUID
  • Transaction hash on destination chain
  • Validator confirmation transaction
  • All publicly verifiable

Failed Bridge Handling

What happens if bridge fails:

Scenario 1: Message never delivered

Your USDC left Scroll → LayerZero marks as FAILED
→ Validator detects failure
→ Calls markDepositFailed() on your vault
→ Triggers refund flow on destination chain
→ Your funds return to your vault on Scroll

Scenario 2: Destination rejects deposit

Message delivered → Destination protocol rejects
→ Validator detects rejection
→ Marks operation as failed
→ Refund automatically processed
→ Funds return to your vault

Scenario 3: Stuck message

Message stuck for 24+ hours
→ Validator triggers timeout refund
→ Manual recovery process initiated
→ Funds recovered to your vault

Your protection:

  • Automatic refund mechanisms
  • 24-hour timeout safety net
  • Manual recovery as last resort
  • Funds never permanently lost

Emergency Recovery

Stuck ETH Recovery

If ETH gets stuck in your vault:

function recoverETH() external onlyOwner {
    // You can recover stuck ETH anytime
    payable(msg.sender).transfer(address(this).balance);
}

When this might happen:

  • Accidental ETH sent to vault
  • Failed transaction refunds
  • Gas refunds from sponsored transactions

How to recover:

  1. Navigate to vault settings
  2. Click "Recover ETH"
  3. Approve transaction
  4. ETH sent to your wallet

Failed Bridge Recovery

If bridge operation fails:

Automatic recovery:

  • Validator detects failure within 60 seconds
  • Calls markDepositFailed() or markWithdrawalFailed()
  • Refund processed automatically
  • Funds return to your vault

Manual recovery (if automatic fails):

  1. Contact support with message GUID
  2. Team verifies operation status
  3. Manual refund transaction submitted
  4. Funds recovered within 24 hours

Your safety net:

  • Funds never lost, only delayed
  • Multiple recovery mechanisms
  • Support team available 24/7
  • All recovery operations on-chain and verifiable

Lost Message GUID

If you lose your message GUID:

Recovery steps:

  1. Provide your vault address
  2. Provide approximate transaction time
  3. Support team locates your operation
  4. Message GUID retrieved from blockchain
  5. Recovery process continues normally

Prevention:

  • Message GUID shown in pending operations
  • Transaction hash also works for recovery
  • Keep screenshots of pending operations
  • Check email for transaction confirmations

Protocol Risk Management

Strategy Vetting Process

Before listing any strategy:

  1. Protocol audit check

    • Must have independent security audit
    • No critical vulnerabilities
    • Audit report publicly available

  2. TVL and maturity check

    • Minimum $10M TVL
    • Operating for 90+ days
    • No major security incidents

  3. ERC4626 compatibility

    • Standard vault interface
    • Or custom adapter available
    • Tested integration

  4. Oracle reliability

    • Reliable price feeds
    • Manipulation-resistant
    • Multiple data sources

Continuous monitoring:

  • Daily TVL checks
  • APY anomaly detection
  • Security incident monitoring
  • Community feedback review

Risk Isolation

Position-level isolation:

  • Each position is independent
  • Exploit in one protocol doesn't affect others
  • Your vault holds receipt tokens, not base assets directly

Example:

Your portfolio:
- 1,000 USDC in Aave (Arbitrum)
- 1,000 USDC in Morpho (Base)
- 1,000 USDC in Compound (Optimism)

If Aave is exploited:
 Morpho position unaffected
 Compound position unaffected
 Aave position may lose value
Risk: Limited to 33% of portfolio

Diversification benefits:

  • Spread risk across protocols
  • Spread risk across chains
  • No single point of failure
  • Bundles automatically diversify

Incident Response

If external protocol suffers security incident:

Immediate actions:

  1. Disable affected strategy (no new deposits)
  2. Publish incident report on dashboard
  3. Provide recommended actions to users
  4. Monitor situation closely

User options:

  1. Withdraw from affected strategy immediately
  2. Wait for protocol recovery
  3. Move funds to unaffected strategies
  4. Withdraw all funds to wallet

Communication:

  • Real-time alerts on dashboard
  • Email notifications to affected users
  • Telegram announcements
  • Twitter updates

Recovery coordination:

  • Work with affected protocol on recovery
  • Provide guidance on claiming refunds
  • Assist with insurance claims if available
  • Transparent updates throughout process

Smart Contract Upgrade Safety

Upgrade Process

Step 1: Proposal (Day 1)

  • Admin proposes upgrade to beacon
  • Upgrade code published for review
  • Reason for upgrade explained
  • Community discussion begins

Step 2: Timelock (Day 2-3)

  • 24-hour minimum delay enforced
  • Community can review code
  • Security researchers can audit
  • Users can withdraw if concerned

Step 3: Execution (Day 3)

  • Upgrade executed after timelock
  • All vaults use new implementation
  • User funds never touched
  • Positions preserved

Step 4: Verification (Day 4+)

  • Upgraded contract verified on block explorer
  • Functionality tested
  • Community confirms no issues
  • Normal operations resume

What Upgrades Can Change

Allowed changes:

  • Fix security vulnerabilities
  • Add new features
  • Optimize gas usage
  • Improve user experience
  • Add new integrations

Forbidden changes:

  • Access user funds
  • Modify user balances
  • Change ownership of vaults
  • Bypass security checks
  • Remove user permissions

User Protection During Upgrades

Your options:

  • Monitor upgrade proposals
  • Review upgrade code (if technical)
  • Withdraw funds before upgrade (if concerned)
  • Participate in community discussion
  • Report concerns to team

Safety guarantees:

  • Minimum 24-hour notice
  • Cannot be rushed or bypassed
  • All storage preserved
  • Funds never at risk
  • Can withdraw anytime

Security Best Practices

For Users

Protect your wallet:

  • Use hardware wallet for large amounts
  • Never share private keys or seed phrases
  • Verify contract addresses before approving
  • Use separate wallet for DeFi (not your main holdings)

Monitor your positions:

  • Check dashboard regularly
  • Set up email/Telegram alerts
  • Verify transactions on block explorer
  • Keep records of deposits and withdrawals

Start small:

  • Test with small amounts first
  • Understand how system works
  • Gradually increase allocation
  • Diversify across strategies

Stay informed:

  • Join Telegram for real-time updates
  • Follow Twitter for announcements
  • Read security advisories
  • Participate in community discussions

Red Flags to Watch For

Warning signs:

  • 🚩 Sudden large APY increases (may indicate exploit)
  • 🚩 Withdrawal delays (check protocol status)
  • 🚩 Unusual vault balance changes (verify transactions)
  • 🚩 Unannounced contract upgrades (should never happen)

Immediate actions if you see red flags:

  1. Stop new deposits immediately
  2. Check official channels (Telegram, Twitter)
  3. Verify on block explorer
  4. Contact support if suspicious
  5. Consider withdrawing funds

Security Roadmap

Current (v1)

  • Audited smart contracts
  • Non-custodial architecture
  • Beacon proxy upgrades
  • Validator monitoring
  • Slippage protection

In Progress

  • 🔄 Bug bounty program launch
  • 🔄 Additional security audits
  • 🔄 Formal verification of core contracts
  • 🔄 Insurance partnership exploration

Planned (v2)

  • 📋 Decentralized validator network
  • 📋 On-chain governance for upgrades
  • 📋 Emergency pause mechanisms
  • 📋 Multi-sig admin controls
  • 📋 Time-locked withdrawals (optional)

Common Security Questions

Q: What if SynthOS gets hacked?
A: Your funds are in your non-custodial vault, not held by SynthOS. An exploit would need to target specific smart contracts, not "SynthOS" as a company. We have multiple layers of protection and insurance is being explored.

Q: Can the team steal my funds?
A: No. The smart contracts have no admin functions that allow withdrawing user funds. Even during upgrades, user balances cannot be modified.

Q: What if LayerZero bridge fails?
A: Failed bridges trigger automatic refunds. Your funds return to your vault on Scroll. In the worst case, manual recovery is available.

Q: What if a strategy protocol gets exploited?
A: Risk is isolated to that specific position. Your other positions are unaffected. You can immediately withdraw from unaffected strategies.

Q: How do I verify my transactions?
A: Every operation has a transaction hash. Check on Scrollscan (for Scroll transactions) or LayerZero Scan (for cross-chain messages). All operations are publicly verifiable.

Q: What if the validator goes rogue?
A: The validator cannot access your funds or create fake positions. Worst case is delayed confirmations. Backup validators are available, and the community can run independent validators.

Next Steps

Ready to start securely? Launch SynthOS App →