Security Review

This audit evaluates the Logarithm protocol, an on-chain public derivative crossing infrastructure designed to optimize leveraged trades and generate asymmetric yields. The Basis Strategy System underpins this framework, enabling delta-neutral basis trading by earning yield from funding payments. By pairing spot purchases with perpetual short positions, the system effectively hedges market exposure while capitalizing on funding revenue. Built with security, flexibility, and efficiency in mind, the protocol offers a yield-generating strategy that minimizes directional risk while leveraging perpetual funding markets. Our security assessment involved a thorough review of eleven smart contracts over three weeks. During the audit, we identified four high-severity vulnerabilities that could impact the protocol's rebalance process and potentially allow the theft of user funds. Additionally, we discovered four medium-severity vulnerabilities, seven low-risk issues, and three informational findings. All reported issues were fixed by the development team and subsequently validated by us. As a result, we can confidently state that the security and overall code quality of the protocol have improved following our audit.