Precision Loss in getAmountOut Function Leads to Incorrect Price Calculations

[c4-bot-6]

Lines of code

https://github.com/ronin-chain/katana-v3-contracts/blob/03c80179e04f40d96f06c451ea494bb18f2a58fc/src/periphery/libraries/KatanaV2Library.sol#L46

Vulnerability details

Summary

The getAmountOut function in KatanaV2Library.sol can return zero due to precision loss when there's a large disparity between reserveIn and reserveOut. While this doesn't directly cause loss of funds, it can lead to incorrect price calculations that affect other protocol functions.

PoC

function testPrecisionLoss() public {
    uint256 amountIn = 100;
    uint256 reserveIn = 20000;
    uint256 reserveOut = 100;
    
    
    uint256 amountInWithFee = 100 * 997;                    // = 99,700
    uint256 numerator = 99,700 * 100;                       // = 9,970,000
    uint256 denominator = (20000 * 1000) + 99,700;         // = 20,099,700
    uint256 amountOut = 9,970,000 / 20,099,700;            // = 0 (0.496 rounded down)
    
    // User loses all expected output
    assert(amountOut == 0);  // True, demonstrating the issue
}

Assessed type

Other