Integer precision loss in on-chain drift calculation causes phantom rebalances and missed real drift for low-price assets

[Uchechukwu-Ekezie]

Summary

check_rebalance_needed computes each asset's current portfolio weight using sequential integer division:

// contracts/src/lib.rs
let current_asset_value = (current_balance * price_data.price) / 10i128.pow(14);
let current_percent = (current_asset_value * 100) / total_value;

let drift = (current_percent as i128 - target_percent as i128).abs();
if drift > portfolio.rebalance_threshold as i128 {
    return true;
}

Both intermediate divisions truncate toward zero before accumulating further computation, producing systematic rounding error that scales with the number of assets and their relative magnitudes.

Concrete Example

Portfolio: 3 assets, target 33%/33%/34%, threshold = 2%.

Asset	Balance	Price (scaled ×10^7)	Actual value	current_asset_value (after /10^14)	current_percent (after ×100/total)
XLM	10_000_000	3_540_000	35.40	0 (lost in division)	0
USDC	10_000_000	10_000_000	100.00	1	100%
BTC	100	1_100_000_000_000	110_000.00	110_000	~100%

XLM's entire value is zeroed out by integer truncation (10_000_000 × 3_540_000 = 3.54×10^13, divided by 10^14 = 0). The contract then reports XLM drift of 33% — a phantom rebalance trigger every single check, even when the portfolio is perfectly balanced.

Impact

• Phantom rebalance storms: XLM-heavy portfolios trigger execute_rebalance every cooldown cycle due to computed drift of ~33% when true drift is 0%.
• Missed real drift: Conversely, assets with large balances but small prices can have their drift absorbed into rounding noise, suppressing legitimate rebalances.
• Cooldown exploitation: Phantom triggers burn the 3600-second cooldown, preventing real rebalances when the market actually drifts.

Root Cause

The Reflector oracle scales prices by 10^7. Balances stored as raw token amounts (typically 7-decimal Stellar tokens = 10^7 scale). current_balance × price = 10^7 × 10^7 = 10^14, which survives division by 10^14 — but only for assets with balance ≥ 10^7. Sub-unit balances are zeroed.

The 10^14 divisor hardcoding does not account for assets with different decimal precisions.

Suggested Fix

Defer all division to the final percentage comparison and use basis points (10_000) instead of percent (100) to preserve 2 decimal places of drift resolution:

// Compute in basis points (1 bp = 0.01%) to avoid early truncation
let current_asset_value_scaled = current_balance * price_data.price; // keep full precision
let current_bp = (current_asset_value_scaled * 10_000) / (total_value_scaled);
let target_bp = target_percent as i128 * 100; // convert % to bp
let drift_bp = (current_bp - target_bp).abs();
if drift_bp > portfolio.rebalance_threshold as i128 * 100 {
    return true;
}

Also parameterize the price scale per-asset rather than hardcoding 10^14.

References

• contracts/src/lib.rs — check_rebalance_needed
• backend/src/services/reflector.ts — REFLECTOR_PRICE_SCALE = 1e7

Severity: High — silent precision loss triggers incorrect rebalances on every cycle for common asset combinations

[Ebenezer199914]

can i work on this issue