SatLayer Smart Contract Audit Report

SatLayer is a restaking infrastructure enabling stakers to provide cryptoeconomic security to multiple validation services simultaneously. The focus of this audit is a newly developed ERC20 liquid staking system. ERC4626-compliant tokenized vaults are used where users deposit ERC20 assets that are delegated to registered operators who validate for validated services.

The core architecture includes a registry managing bilateral service-operator relationships and slashing parameters, vaults implementing asynchronous ERC7540 redemptions with withdrawal delays for security, and a router coordinating slashing processes with guardrail oversight. The protocol’s security model relies on economic penalties where misbehaving operators have vault assets transferred to affected services, with historical parameter tracking preventing retroactive rule changes and resolution windows allowing operator disputes before asset liquidation.

This audit report mainly covers the Solidity contracts of the satlayer-bvs repository at commit 5a0877730a98fd0dc57ff95b75236d822bef506b.

Contracts in Scope:

contracts/src/
├── interface/
│   ├── ISLAYRegistryV2.sol
│   ├── ISLAYRewardsV2.sol
│   ├── ISLAYRouterSlashingV2.sol
│   ├── ISLAYRouterV2.sol
│   ├── ISLAYVaultFactoryV2.sol
│   └── ISLAYVaultV2.sol
├── MerkleProof.sol
├── RelationshipV2.sol
├── SLAYBase.sol
├── SLAYRegistryV2.sol
├── SLAYRewardsV2.sol
├── SLAYRouterV2.sol
├── SLAYVaultFactoryV2.sol
└── SLAYVaultV2.sol

The audit’s main target is security threats, i.e., what the community understanding would likely call “hacking”, rather than the regular use of the protocol. Functional correctness (i.e. issues in “regular use”) is a secondary consideration. Typically it can only be covered if we are provided with unambiguous (i.e. full-detail) specifications of what is the expected, correct behavior. In terms of functional correctness, we often trusted the code’s calculations and interactions, in the absence of any other specification. Functional correctness relative to low-level calculations (including units, scaling and quantities returned from external protocols) is generally most effectively done through thorough testing rather than human auditing.

The audited contracts have been analyzed using automated techniques and extensive human inspection in accordance with state-of-the-art practices as of the date of this report. The audit makes no statements or warranties on the security of the code. On its own, it cannot be considered a sufficient assessment of the correctness of the contract. While we have conducted an analysis to the best of our ability, it is our recommendation for high-value contracts to commission several independent audits, a public bug bounty program, as well as continuous security auditing and monitoring through Dedaub Security Suite.

Dedaub offers significant security expertise combined with cutting-edge program analysis technology to secure some of the most prominent protocols in DeFi. The founders, as well as many of Dedaub's auditors, have a strong academic research background together with a real-world hacker mentality to secure code. Protocol blockchain developers hire us for our foundational analysis tools and deep expertise in program analysis, reverse engineering, DeFi exploits, cryptography and financial mathematics.