Reserve Protocol

Audits and Due Diligence Disclosures

Audit Status: Comprehensive, with audits covering each major version including the recently-deployed v4.2.0.

Audit reports are published in reserve-protocol/protocol/audits and on the Reserve Security docs:

Firm	Scope	Date
Trail of Bits	Reserve Protocol (security review + fix review)	2022-08
Solidified	Reserve Protocol core	2024-04
Solidified	Reserve Protocol 3.4.0	2024
Halborn	Reserve Protocol smart contracts	—
Ackee Blockchain	Reserve Protocol	—
Code4rena	Releases 2.1.0, 3.0.0 (core + collaterals), 4.0.0	2023–2025
Trust Security	Releases 3.1.0, 3.2.0, 3.4.0 Spell, 4.2.0	2024–2026
Oak Security	Reserve Updates (4.x)	2026-03-12
Certora	Formal verification of FixLib	2026-04

The current onchain Main implementation (version() = "4.2.0") was deployed and granted ownership at block 24,944,370 (2026-04-23) via the Upgrade4_2_0 spell (0xbff761d367291281f3c4db4bda2c591d6dde3601).

Findings: No critical unresolved issues disclosed. v4.2.0 audits (Trust Security, Oak Security, Certora) were completed before mainnet activation.

Smart Contract Complexity: Moderate–High. Multi-contract architecture (Main, RToken, StRSR, BackingManager, BasketHandler, AssetRegistry, Distributor, Furnace, Broker, RSRTrader, RTokenTrader) plus per-collateral plugins. All contracts are upgradeable ERC-1967 proxies behind the Main access controller.

Bug Bounty

Platform: Cantina Maximum Payout: $10,000,000 (Critical tier) Severity tiers: Critical $10M / High $100k / Medium $5k / Low $1k Status: Live (launched 2026-03-26; 106 findings submitted as of this assessment) Link: https://cantina.xyz/bounties/3709ca85-4050-407e-9b36-51f5d5ea9b00

Reserve Protocol is not enrolled in the SEAL Safe Harbor agreement (verified via safeharbor.securityalliance.org).

Historical Track Record

Time in Production:

• Reserve Protocol RTokens: live since 2023-04 (~3 years)
• ETH+ specifically: deployed in basket nonce 1 at block 17,086,178 (2023-04-26), ~3 years
• Current architecture upgraded to v4.2.0 on 2026-04-23 (4 days before this assessment) — material change worth flagging

Past Security Incidents:

• No exploits or hacks on Reserve Protocol or ETH+
• No collateral default events triggered for ETH+
• StRSR exchange rate is monotonically increasing (1.162 RSR/stRSR currently) — no RSR has been seized to cover losses

Peg / Basket Stability:

• ETH+ has no fixed peg to ETH; it tracks the appreciating basket value (currently 1.076 ETH per ETH+)
• No significant deviations from basket value have been observed
• Direct redemption provides a hard floor

TVL History:

• Peak: ~36,246 ETH (~$108M) at 2025-12-22
• Today: 27,248 ETH+ (~$67M) — supply contracted ~25% in ~4 months
• Reserve total TVL peaked at $530M on 2025-09-13, now $100M
• The supply contraction is large enough to warrant monitoring, but the protocol remains fully collateralized and status() is SOUND

Team Track Record:

• Reserve has been building since 2018; previously launched RSV (USD-pegged stablecoin)
• Active development continues: most recent commits add RToken Deprecation tooling, Certora verification, weETH whale tests
• Operator entity is ABC Labs, LLC (per reserve.org legal notice) — not "Reserve Labs" as commonly written. The Reserve trademark is held by Confusion Capital

Funds Management

Fund Delegation: Yes. ETH+ holds five LSTs as collateral, each wrapping its own underlying staking protocol:

• wstETH → Lido (50.0%)
• weETH → Ether.fi (22.0%) — added since prior assessment
• sfrxETH → Frax (10.0%)
• rETH → Rocket Pool (10.0%)
• ETHx → Stader (8.0%)

Due Diligence on Underlying Protocols:

• wstETH (Lido) and rETH (Rocket Pool) are blue-chip LSTs with the longest track records
• weETH (Ether.fi) is the largest restaking-LST and has Chainlink price feeds
• sfrxETH (Frax) has historically lacked a Chainlink ETH-denominated PoR; LlamaRisk flagged it as more centralized — Reserve uses an alternative oracle plugin
• ETHx (Stader) is the smallest, both in basket weight (8%) and standalone TVL — highest single-name idiosyncratic risk in the basket

Monitoring Fund Delegation:

• Basket is fully onchain and queryable via BasketHandler.quote() and nonce()
• Basket changes emit BasketSet(uint256 nonce, address[] erc20s, uint192[] refAmts, bool disabled)
• Governance proposals to change the basket pass through Governor Anastasius (2-day voting delay, 10% StRSR quorum, 3-day vote) plus a 3-day timelock — total floor ~8 days from proposal to execution

Accessibility

Minting:

• Permissionless. Anyone can call RToken.issue() / issueTo()
• Atomic in a single transaction; users deposit the proportional basket of LSTs (or a single asset using the Reserve "zap" router)
• Subject to issuance throttle: amtRate = 1,700 ETH+/hr, pctRate = 10%/hr. Effective hourly cap is the larger of the two; issuanceAvailable() = 2,724.78 ETH+ at the time of writing
• Backing is required to mint. There is no admin-controlled mint function; MAIN cannot mint ETH+ directly, and there is no role labeled "minter"

Redemption:

• Permissionless. RToken.redeem(amount) returns the prorata basket (or a custom basket if redeeming during a basket switch via redeemCustom)
• Throttle: amtRate = 2,000 ETH+/hr, pctRate = 12.5%/hr. redemptionAvailable() = 3,405.98 ETH+ currently
• A full redemption of the entire supply would take ~8 hours under the current pctRate cap
• No fees, no cooldown. Redemption is paused only if tradingPaused or system frozen

Slippage:

• Mint/redeem is a basket operation — no slippage from the protocol itself
• Slippage applies only when a user converts the redeemed LSTs back to ETH on a DEX

Collateralization

On-Chain Collateralization: Yes — 100%, fully onchain.

• All collateral is held in the BackingManager (0x608e1e01EF072c15E5Da7235ce793f4d24eCa67B)
• Verified directly: backing manager holds ~11,925 wstETH, ~5,915 weETH, ~2,543 sfrxETH, ~2,530 rETH, ~2,163 ETHx → ~29,406 ETH-equivalent vs. 27,248 ETH+ supply
• BasketHandler.fullyCollateralized() returns true

Collateral Quality: High. All five collateral assets are established Ethereum LSTs, each with independent audits, Chainlink-style price feeds (or vetted alternates), and active markets.

Over-Collateralization (RSR buffer):

• StRSR contract holds ~898M RSR as a first-loss buffer
• At the current RSR price (~$0.00180), this is ~$1.61M of buffer for $66.98M of ETH+ TVL → ~2.4% OC
• This is in line with LlamaRisk's 2024 finding (2%) and remains the protocol's main material weakness. The buffer scales with RSR price, not ETH+ TVL

Default Handling:

• BasketHandler.refresh() checks each collateral's price/peg every interaction
• A collateral that depegs persistently transitions through IFFY → DISABLED and is removed from the basket
• The protocol then triggers automatic auctions to swap the disabled collateral, using the backup basket and, if needed, seizing RSR from StRSR
• Emergency collateral: WETH (0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2) is in the asset registry as a fallback

Risk Curation:

• Basket composition, collateral plugins, and throttle parameters are all governance-managed
• Changes require Governor Anastasius proposal + 3-day timelock execution

Off-Chain Components: None. Fully onchain — no custodians, no off-chain reserve management, no T-bills, no real-world assets.

Provability

Reserve Verification: Easy.

• BasketHandler.basketsHeld() and RToken.basketsNeeded() are public view functions
• Backing computation is deterministic from onchain state plus oracle prices
• Anyone can call BasketHandler.refresh() and the protocol's status updates atomically

Yield Calculation: Transparent. Yield is the appreciation of basketsNeeded / totalSupply, driven entirely by the appreciation of the underlying LSTs.

On-Chain Reporting: Programmatic. There is no admin-controlled exchange rate.

Off-Chain Reserves: None.

Third-Party Verification: Chainlink price feeds are used for collateral plugins (with curated alternates where Chainlink is not available, e.g., sfrxETH).

Minting Without Backing: Not possible. There is no minter role and no admin function to mint ETH+ outside of RToken.issue(), which requires the user to deposit the basket.

Liquidity Risk

Direct Redemption: Always available (subject to throttle). 1:1 with the basket.

On-Chain DEX Liquidity (per DefiLlama, 2026-04-27):

Pool	TVL
Curve ETH+/WETH	$12.5M
Convex ETH+/WETH (boosted Curve)	$7.3M
Beefy ETH+/WETH	$5.6M
StakeDAO ETH+/WETH	$5.4M
Curve ETH+/EUSD-RSR	$2.6M
Curve ETH+/ETH	$0.5M
Uniswap v3 WETH/ETH+	$1.0M
Morpho Blue ETH+	$3.9M

The primary spot pool (Curve ETH+/WETH) has ~$12.5M TVL. With Convex/Beefy/StakeDAO wrappers around the same Curve pool, the underlying Curve LP TVL is the binding liquidity for direct DEX exits.

Slippage Analysis (rule-of-thumb):

• <$100k: Minimal (<0.5%) via direct redemption
• $100k–$1M: 0.5–2% via redemption or DEX

• $1M: Direct redemption preferred; selling components on their own deep markets is the cleanest exit

Withdrawal Restrictions:

• Throttle limits redemption to ~12.5% of supply per hour (~3,406 ETH+ now)
• A full exit of the entire ETH+ supply would take ~8 hours

Historical Liquidity:

• No liquidity-stress incidents recorded
• DEX liquidity has tracked the supply contraction since Q1 2026

Centralization & Control Risks

Governance

Contract Upgradeability: Yes. All core contracts are ERC-1967 proxies. Implementations can be swapped by the OWNER role on Main.

Governance Path (post-2026-04-23 upgrade):

Component	Address	Notes
Main (proxy)	0xb6A7d481719E97e142114e905E86a39a2Fa0dfD2	version() = 4.2.0
Main implementation	0xc5bf686cfb85786fcfff557297d4aff8f4e15e44
Governor (Governor Anastasius v1)	0xa8a608b9b558235e7f87d7024cc05e6f47d62022	OZ Governor, voting token = StRSR
Timelock	0xd7985a7c617febc4a833b5f70cfa79b40c313ad2	OZ TimelockController, getMinDelay() = 259,200s (3 days)
Guardian Safe (canceller + pauser + freezers)	0xd5fe2780eb882d1da78f2136b81c2a4395488c98	3-of-6 Gnosis Safe

Governor Anastasius parameters (verified onchain):

• Voting delay: 172,800s (2 days)
• Voting period: 259,200s (3 days)
• Quorum: 10% of staked RSR (quorumNumerator/quorumDenominator = 10/100)
• Proposal threshold: 76,720.92 stRSR

End-to-end change cadence: ~2 days (voting delay) + 3 days (vote) + 3 days (timelock) = ~8 days from proposal to execution, assuming quorum.

Privileged Roles on Main (verified via hasRole):

Role	Holder(s)	Power
OWNER (bytes32("OWNER"))	Timelock 0xd7985a7c…	Upgrade implementations, change basket, modify parameters, manage all other roles
PAUSER	Guardian Safe 0xd5fe2780… and an EOA 0xe3e34fa9…	Pause issuance & trading (cannot freeze redemption)
SHORT_FREEZER	Guardian Safe 0xd5fe2780…	Freeze the system for 6 hours
LONG_FREEZER	Guardian Safe 0xd5fe2780…	Freeze for an extended period (governance-set)
Timelock CANCELLER	Guardian Safe 0xd5fe2780…	Cancel queued timelock proposals

Finding: The deployer EOA 0xe3e34fa93575af41bef3476236e1a3cdb3f60b85 still holds the PAUSER role on Main. It was granted at deployment (block 17,086,220) and was not revoked in the 4.2.0 upgrade transaction. PAUSER cannot freeze the system or seize funds, but a single private-key compromise here would let an attacker pause issuance and trading, disrupting the protocol. The condition has existed since 2023 deployment with no incident; documented here for the role-holder watch list rather than scored as a discrete penalty.

Old governance (pre-upgrade, no longer authoritative): the previous timelock 0x5f4A10aE2fF68bE3cdA7d7FB432b10C6BFA6457B was revoked from OWNER, PAUSER, SHORT_FREEZER, and LONG_FREEZER at block 24,944,370.

Powers Analysis:

• Governance cannot seize user funds directly
• Governance can swap collateral, change implementations, modify throttles, and change oracles — all subject to the 3-day timelock, giving holders a window to redeem
• The Guardian Safe can pause and freeze, and can cancel governance proposals — concentrating real-time emergency power in a 3-of-6 multisig
• The deployer EOA can pause issuance/trading

Risk Assessment: Medium. The 3-day timelock and 8-day proposal cycle are at the lower end of acceptable; the guardian Safe and active EOA pauser are the main centralization vectors.

Programmability

System Programmability: Highly programmatic.

• Basket valuation, default detection, redemption, and reward distribution are all onchain
• Furnace.melt() and Distributor.distribute() can be called by anyone (no privileged keeper)
• PPS is basketsNeeded / totalSupply — no oracle, no admin update, no offchain accounting

Non-Programmatic Elements:

• Basket composition and weights are set by governance
• Oracle plugin addresses are governance-controlled (some collateral plugins use non-Chainlink oracles where Chainlink lacks coverage)

External Dependencies

Critical dependencies:

1. Chainlink — used for the bulk of collateral price feeds. Failure of a single feed only impacts the corresponding collateral
2. Five LST issuers — Lido, Ether.fi, Frax, Rocket Pool, Stader. A solvency event at any single issuer would trigger that collateral's default path; ETH+ would revert to the backup basket and slash RSR to recapitalize
3. Ethereum L1 — fully onchain, no cross-chain bridges

Concentration:

• Lido (wstETH) is 50% of basket value — the largest single-name dependency
• The remaining 50% is split across four LSTs, which materially diversifies idiosyncratic risk

Operational Risk

Operating Entity: ABC Labs, LLC (per reserve.org legal notice). The "Reserve" trademark is held by Confusion Capital, a separate entity.

Team Transparency: Public, doxxed core team with established reputation; long history of public communication.

Documentation: Comprehensive technical and developer documentation; per-version audit reports published in-repo.

Communication Channels:

• Discord (active, multiple thousand members)
• Twitter: @reserveprotocol
• Forum: discourse.reserve.org
• GitHub: reserve-protocol/protocol (active)

Development Activity: Active. Recent commits (last 90 days) include weETH integration tests, Certora formal verification, RToken deprecation tooling, and the v4.2.0 audit cycle.

Incident Response:

• Active Cantina bug bounty ($10M max payout)
• Pause/freeze mechanisms at multiple severity levels
• Guardian multisig with timelock-cancellation power for live-incident response
• No prior incidents to assess response from

Monitoring

1. Governance Monitoring (MANDATORY)

Component	Address	Events / Functions to monitor
Governor Anastasius v1	0xa8a608b9b558235e7f87d7024cc05e6f47d62022	ProposalCreated, ProposalExecuted, ProposalCanceled, VoteCast
Timelock	0xd7985a7c617febc4a833b5f70cfa79b40c313ad2	CallScheduled, CallExecuted, Cancelled
Guardian Safe	0xd5fe2780eb882d1da78f2136b81c2a4395488c98	Owner changes, threshold changes, all executions (yearn safe-monitoring)
Main (hasRole)	0xb6A7d481719E97e142114e905E86a39a2Fa0dfD2	RoleGranted, RoleRevoked for OWNER / PAUSER / SHORT_FREEZER / LONG_FREEZER

Action: add to yearn/monitoring-scripts-py. Recommended cadence: hourly poll for queued timelock calls; immediate alert on any RoleGranted/Revoked or Guardian Safe execution.

Important: the deployer EOA 0xe3e34fa93575af41bef3476236e1a3cdb3f60b85 still has PAUSER. Add to the role-watch list and alert on any transaction from it.

2. Backing / Collateralization Monitoring (MANDATORY)

Check	Function	Threshold
Fully collateralized	BasketHandler.fullyCollateralized()	must be true
Basket status	BasketHandler.status()	must be 0 (SOUND); alert on 1 (IFFY) or 2 (DISABLED)
Backing ratio	RToken.basketsNeeded() / RToken.totalSupply()	must be ≥ 1.0
Basket nonce changes	BasketHandler.nonce() and BasketSet event	alert on any change

Recommended cadence: hourly.

3. RSR Buffer Monitoring

Component	Address	Check
StRSR	0xffa151Ad0A0e2e40F39f9e5E9F87cF9E45e819dd	exchangeRate() — alert on any decrease (RSR seizure)
RSR balance held by StRSR	RSR.balanceOf(StRSR)	track absolute value; alert on >10% drop

OC ratio = (RSR_balance × RSR_price) / ETH+_TVL — currently ~2.4%. Alert if it drops below 1%.

4. Throttle Monitoring

RToken.issuanceAvailable() and redemptionAvailable() should normally track 10–12.5% of supply. Persistent depletion of redemptionAvailable indicates large coordinated exits; alert if it stays below 1% of supply for >2 hours.

5. Implementation Upgrade Monitoring

ERC-1967 implementation slot (0x360894a13ba1a3210667c828492db98dca3e2076cc3735a920a3ca505d382bbc) on every core contract: alert on any change.

Appendix: Contract Architecture

                                  ┌──────────────────────────────────┐
                                  │        Governance layer          │
                                  │                                  │
                           ┌──────│ Governor Anastasius v1           │
                           │      │ 0xa8a608b9…                      │
                           │      │ • 2d voting delay                │
                           │      │ • 3d voting period               │
                           │      │ • 10% StRSR quorum               │
                           │      │ • 76,720 stRSR proposal threshold│
                           │      └──────────────────────────────────┘
                           │ proposals
                           ▼
                  ┌────────────────────────────┐         ┌────────────────────────┐
                  │ TimelockController         │◀────────│ Guardian Safe (3-of-6) │
                  │ 0xd7985a7c…                │ cancel  │ 0xd5fe2780…            │
                  │ minDelay = 259,200s (3d)   │         │ + PAUSER, S/L_FREEZER  │
                  └─────────────┬──────────────┘         │ on Main                │
                                │ executes               └────────────────────────┘
                                │ (OWNER role)                         │
                                ▼                                      │ (also pauser:
                  ┌──────────────────────────────────┐                 │  EOA 0xe3e34fa9…)
                  │  Main (ERC1967Proxy)             │                 │
                  │  0xb6A7d481…    impl 0xc5bf686c… │◀────────────────┘
                  │  version 4.2.0                   │
                  │  AccessController for all roles  │
                  └────────────┬─────────────────────┘
                               │ wires
        ┌──────────┬───────────┼────────────┬──────────┬──────────┬──────────────┐
        ▼          ▼           ▼            ▼          ▼          ▼              ▼
  ┌───────────┐ ┌────────┐ ┌──────────┐ ┌─────────┐ ┌────────┐ ┌─────────┐ ┌────────────┐
  │ RToken    │ │ StRSR  │ │ Backing  │ │ Basket  │ │ Asset  │ │ Furnace │ │ Distributor│
  │ ETH+      │ │ stRSR  │ │ Manager  │ │ Handler │ │ Reg.   │ │ +Broker │ │ +Traders   │
  │ 0xE72B…   │ │ 0xffa1…│ │ 0x608e…  │ │ 0x56f4… │ │ 0xf526…│ │         │ │            │
  └─────┬─────┘ └───┬────┘ └────┬─────┘ └────┬────┘ └────────┘ └─────────┘ └────────────┘
        │           │           │            │
        │ issue/    │ stake/    │ holds      │ defines
        │ redeem    │ unstake   │ collateral │ basket
        │           │           ▼            ▼
        │           │      ┌─────────────────────────────────┐
        │           │      │      LST collateral plugins     │
        │           │      │  wstETH 50%  weETH 22%  rETH 10%│
        │           │      │  sfrxETH 10% ETHx 8%            │
        │           │      └────────────┬────────────────────┘
        │           │                   │
        │           │                   ▼
        │           │      ┌─────────────────────────────────┐
        │           │      │   Underlying staking protocols  │
        │           │      │   Lido / Ether.fi / Rocket Pool │
        │           │      │   / Frax / Stader               │
        │           │      └─────────────────────────────────┘
        │           │ provides 1st-loss capital (≈2.4% OC)
        │           ▼
        │      ┌──────────────┐
        └─────▶│ ETH+ holders │
               └──────────────┘

Key trust boundaries:

• The Timelock owns Main; the only path to upgrade or change parameters is governance-proposed and 3-day delayed
• The Guardian Safe (3-of-6) is the only counterparty that can act inside the timelock window — by pausing, freezing, or cancelling proposals
• The deployer EOA can pause but cannot freeze or upgrade
• All collateral is held by BackingManager; ETH+ holders' redemption is a direct claim on it

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Overall Risk Score: 1.8 / 5.0

Risk Tier: LOW RISK

Recommendation: ✅ APPROVED for Yearn integration with standard monitoring, conditional on:

1. Tracking the new (v4.2.0) governance for at least 30 days post-deployment for unexpected behavior
2. Adding all governance / role / backing checks listed in Monitoring to yearn's monitoring repo, including the EOA pauser address
3. Watching the supply contraction trend; reassess if TVL drops below $40M

---

Reassessment Triggers

• Time-based: Reassess in 6 months or sooner if any trigger below fires
• TVL-based: Reassess if ETH+ TVL drops below $40M or grows above $200M
• Basket-based: Reassess on any BasketSet event (basket nonce change)
• Governance-based: Reassess on any of:
  • New OWNER, PAUSER, SHORT_FREEZER, or LONG_FREEZER role grant on Main
  • Guardian Safe owner or threshold change
  • Governor or timelock contract replacement
  • PAUSER role grant or revoke involving the EOA 0xe3e34fa9… (positive: revocation reduces risk score)
• Collateral-based: Reassess on any LST issuer incident (Lido, Ether.fi, Rocket Pool, Frax, Stader)
• OC-based: Reassess if RSR over-collateralization ratio falls below 1%
• Incident-based: Reassess after any pause, freeze, IFFY/DISABLED collateral status, or RSR seizure