Aegis JUSD Smart Contract Audit

Aegis is a multichain stablecoin protocol powering JUSD and YUSD, featuring minting, redemption, staking vaults, rewards distribution, and cross-chain bridging via LayerZero. The system includes multiple oracle paths, mint/burn adapters, ERC-4626 staking vaults, and administrative controls governing collateralized issuance.

FailSafe was engaged to conduct a comprehensive smart contract audit of the Aegis JUSD system across all in-scope contracts, including minting logic, cross-chain adapters, oracle implementations, staking vaults, and rewards distribution modules. The engagement focused on identifying fund safety risks, cross-chain failure modes, oracle correctness, and accounting integrity prior to broader production use. 

Summary of Findings

Severity	Total	Status
Critical	2	2 Resolved
High	1	1 Resolved
Medium	4	2 Resolved, 2 Acknowledged
Low	3	3 Acknowledged
Informational	4	4 Acknowledged
Total	14	All Critical & High Resolved

1. Blacklisted Spender Can Bypass Restrictions via transferFrom

Severity: Critical | Status: Resolved

The JUSD and YUSD contracts implement blacklist checks in _update, validating only the sender and recipient. However, transferFrom and burnFrom allow a blacklisted spender with pre-existing allowance to move or burn tokens on behalf of non-blacklisted users.

This enabled blacklisted addresses to continue operating by draining approved balances, defeating the blacklist’s core purpose.

The issue was resolved by explicitly enforcing blacklist checks on the spender during allowance consumption.

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2. Non-Atomic Bridge Burn: Destination Blacklist/Zero Causes Irrecoverable Loss

Severity: Critical | Status: Resolved

The cross-chain mint/burn flow burns tokens on the source chain before minting on the destination chain. If the destination mint fails due to blacklist enforcement or a zero address recipient, the LayerZero message becomes permanently stuck.

This results in irreversible loss of user funds, as tokens are already burned on the source chain with no refund mechanism.

Mitigations were implemented to handle zero-address recipients and provide fallback minting behavior to prevent permanent loss.

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3. JUSDMintBurnOFTAdapter.sol: Missing address(0) Handling in _credit()

Severity: High | Status: Resolved

The adapter overrides _credit to mint new JUSD but omits the standard OFT safeguard that redirects address(0) to a burn address. This caused cross-chain messages sent to the zero address to revert permanently.

The fix added proper zero-address handling consistent with canonical OFT behavior.

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All Critical and High severity issues were fully resolved prior to report finalization. Read about all findings in the report below.

Aegis JUSD Security Posture

The Aegis team demonstrated strong responsiveness throughout the audit process, addressing high-impact vulnerabilities promptly and engaging deeply on cross-chain safety, oracle integrity, and accounting correctness.

The findings highlight the inherent complexity of multichain stablecoin systems, particularly around non-atomic bridge flows, oracle trust assumptions, and minting constraints. The remediation of Critical and High issues significantly strengthens the protocol’s resilience against fund loss and systemic failure.

FailSafe’s Closing Remarks

FailSafe commends the Aegis team for their cooperation and commitment to resolving high-risk issues prior to wider deployment. With all Critical and High findings addressed and remaining risks clearly documented, Aegis JUSD is meaningfully more robust and secure.

FailSafe remains available to support Aegis as a long-term security partner as the protocol evolves.