Security and Compliance

Security Model Overview

All core contracts extend OpenZeppelin’s audited upgradeable libraries (AccessControl2StepUpgradeable, ERC20Upgradeable, ERC20PermitUpgradeable, Initializable). Stablecoin OFT contracts are independently audited. 10 distinct roles enforce separation of duties. Critical pairs are split by design (pauser vs unpauser, minter vs burner, fee admin vs token mint authority). EIP-7201 namespaced storage eliminates storage collision risks during upgrades. Proxy contracts must be deployed and initialized atomically to prevent front-running. Multiple independent enforcement layers (pause, rate limit, allowlist, fee) operate simultaneously. Compromise of one layer does not disable the others.

Compliance Features

KYC/AML Enforcement via Allowlist

The three-mode allowlist system directly supports compliance workflows:

Compliance Requirement	Implementation
KYC-only transfers	Whitelist mode: only verified addresses can send/receive
Sanctions screening	Blacklist mode: block sanctioned addresses while allowing everyone else
Unrestricted operations	Open mode: no address restrictions
Gradual rollout	Start in Whitelist mode for controlled launch, switch to Blacklist after onboarding phase

Mode transitions can be performed instantly by DEFAULT_ADMIN_ROLE without requiring contract upgrades.

Fund Recovery for Regulatory Actions

The recoverFunds() function enables compliance-mandated seizures:

function recoverFunds(address _from, address _to, uint256 _amount) external;
// Requires: DEFAULT_ADMIN_ROLE
// Constraint: _from must NOT be allowlisted

Prerequisite: Blacklist mode must be active (set by DEFAULT_ADMIN_ROLE). Workflow:

Compliance team blacklists the target address via BLACKLISTER_ROLE
Default admin calls recoverFunds() to move tokens to a designated custody address

The constraint that _from must not be allowlisted ensures recovery cannot be used against compliant users. The function reverts with CannotRecoverFromAllowlisted if attempted.

Per-Destination Controls

Per-destination pause (PauseByID) enables targeted responses when a specific chain requires isolation — whether for regulatory reasons, security incidents, or maintenance:

Pause transfers to/from a specific destination chain
Maintain normal operations on all other chains
No contract upgrade required

Audit Trail via Events

Every state-changing operation emits an indexed event:

Category	Events
Transfers	`Transfer`, `OFTSent`, `OFTReceived`
Allowlist	`AllowlistModeUpdated`, `BlacklistUpdated`, `WhitelistUpdated`
Pause	`PauseSet`, `DefaultPauseSet`
Fees	`DefaultFeeBpsSet`, `FeeBpsSet` (fee proceeds also appear as standard ERC20 `Transfer` or native transfers to the configured fee deposit address)
Rate Limits	`RateLimitConfigUpdated`, `RateLimitStateUpdated`, `RateLimitAddressExemptionUpdated`
Access Control	`RoleGranted`, `RoleRevoked`

All events are indexed where applicable, for off-chain monitoring and reporting.

Threat Model

Threat	Impact	Mitigation
Admin key compromise	Attacker grants themselves all roles, drains funds	Use governance multisig for `DEFAULT_ADMIN_ROLE`. Monitor `RoleGranted` events. Consider renouncing admin after initial setup.
Pauser key compromise	Attacker pauses all operations (DoS)	Separate `PAUSER_ROLE` and `UNPAUSER_ROLE`. Assign unpauser to a different multisig. Pausing is disruptive but not catastrophic — funds remain safe.
Unpauser key compromise	Attacker reverses a legitimate security pause	Assign `UNPAUSER_ROLE` to a governance multisig, separate from the pauser key. Monitor `PauseSet` / `DefaultPauseSet` events for unexpected unpauses.
Fee admin compromise	Attacker sets fees to 100%	Fees are pushed to the fee deposit address during `_debit`; the fee admin cannot redirect proceeds. Ensure integrations use `minAmountLD` to reject unexpectedly small received amounts. Monitor `DefaultFeeBpsSet` / `FeeBpsSet`. High fees are visible on-chain and reversible.
Minter key compromise	Attacker mints unlimited tokens, inflating supply	Only grant `MINTER_ROLE` to the OFT contract, never to EOAs. The OFT can only mint via `_credit()` after receiving a verified LayerZero message. Outbound rate limits cap the contagion risk to other chains.
Sanctioned address transfer	Compliance violation	Enable Blacklist mode. Monitor OFAC/sanctions lists. Automate blacklist updates via `BLACKLISTER_ROLE`.
Chain compromise	Malicious messages from a compromised chain	Per-destination pause to isolate the chain. Inbound rate limits cap damage. DVN verification provides message integrity.
Proxy storage collision	Upgrade corrupts storage	EIP-7201 namespaced storage with deterministic slots. Each module has an isolated storage location.
Non-atomic proxy deployment	Attacker front-runs `initialize()` between proxy deploy and initialization	Deploy proxy and call `initialize()` atomically in the same transaction (e.g., via a deployer contract or `TransparentUpgradeableProxy` constructor data).
Dust exploitation	Attacker sends dust amounts to avoid fees	Fee calculation uses `(_amount * bps) / BPS_DENOMINATOR`. Amounts where `amount * bps < BPS_DENOMINATOR` produce zero fee. This is by design — dust amounts are meant to be economically insignificant.
Rate limit bypass via many small txs	Attacker splits large transfer into many small ones	Each transaction updates the bucket. Aggregate usage is tracked regardless of individual transaction size. With net accounting enabled, rounding can slightly favour the user, but the amounts are insignificant relative to the cost of running each `send()` transaction.

Monitoring

Deploy off-chain monitoring for:

Event	Source	Indicates
`RoleGranted` / `RoleRevoked`	OFT, `ERC20Plus`	Permission changes
`DefaultAdminTransferScheduled`	OFT, `ERC20Plus`	Admin transfer initiated
`PauseSet` / `DefaultPauseSet`	OFT	Pause state changes
`DefaultFeeBpsSet` / `FeeBpsSet`	OFT	Fee rate changes
`RateLimitConfigUpdated` / `RateLimitStateUpdated`	OFT	Rate limit config changes
`RateLimitAddressExemptionUpdated`	OFT	Rate limit exemption changes
`AllowlistModeUpdated`	`ERC20Plus`	Allowlist mode transitions
`BlacklistUpdated` / `WhitelistUpdated`	`ERC20Plus`	Address list changes
`OFTSent` / `OFTReceived`	OFT	Cross-chain transfers (alert on large amounts)
`Transfer` (to fee deposit)	`ERC20Plus`	Fee deposit inflows

Next Steps

RBAC Reference for the complete role-to-function matrix
Architecture for the system design overview

LayerZero for EVM

Contract Standards

Stablecoin OFT

Tokenized RWAs OFT

Technical Reference

Troubleshooting

Resources

Security and Compliance

Security Model Overview

Compliance Features

KYC/AML Enforcement via Allowlist

Fund Recovery for Regulatory Actions

Per-Destination Controls

Audit Trail via Events

Threat Model

Monitoring

Next Steps

​Security Model Overview

​Compliance Features

​KYC/AML Enforcement via Allowlist

​Fund Recovery for Regulatory Actions

​Per-Destination Controls

​Audit Trail via Events

​Threat Model

​Monitoring

​Next Steps

Security Model Overview

Compliance Features

KYC/AML Enforcement via Allowlist

Fund Recovery for Regulatory Actions

Per-Destination Controls

Audit Trail via Events

Threat Model

Monitoring

Next Steps