CrossPay Protocol implements a multi-layered security model combining:

• Zama FHE for cryptographic privacy
• Symbiotic Validators for consensus security
• Risk-Stratified Vaults for economic security
• Role-Based Access Control for operational security

1. User Funds: ETH and ERC20 tokens in escrow
2. Validator Stakes: Bonded ETH securing the network
3. Vault Deposits: Risk-tranched liquidity pools
4. Private Data: Encrypted payment amounts and metadata

1. Smart Contract Vulnerabilities: Reentrancy, overflow, access control
2. Cryptographic Attacks: FHE key compromise, signature forgery
3. Validator Attacks: Collusion, censorship, griefing
4. Economic Attacks: Vault manipulation, slashing abuse
5. Privacy Attacks: Disclosure bypass, correlation analysis

• Zama FHE scheme remains secure against chosen-plaintext attacks
• ECDSA signatures cannot be forged without private key knowledge
• Ethereum's consensus layer provides finality guarantees
• Random number generation is unpredictable and unbiased

• At least 67% of validators are honest and responsive
• Network partitions resolve within validation timeout periods
• Smart contract execution environment is not compromised
• Oracle data feeds remain accurate and manipulation-resistant

• Validator slashing penalties exceed potential attack profits
• Vault participants act rationally to maximize risk-adjusted returns
• Gas costs make spam attacks economically infeasible
• Token price stability prevents manipulation of yield calculations

• All user addresses validated against zero address
• Payment amounts checked for minimum thresholds
• Signature verification before processing
• Deadline enforcement on time-sensitive operations
• Tranche deposit limits enforced

• ReentrancyGuard on all external state-changing functions
• Pausable emergency stops across all contracts
• Overflow protection via Solidity 0.8+ built-ins
• Safe ERC20 transfers to handle non-standard tokens

• Encrypted amounts revealed during contract execution for transfers
• Homomorphic operations limited to addition/comparison
• Client-side encryption keys must be managed securely
• Gas costs significantly higher for encrypted operations

• Requires minimum 3 validators for basic security
• No protection against coordinated 67%+ validator attacks
• Signature aggregation increases gas costs linearly with validators
• Network assumes honest majority without stake weighting

• Slashing waterfall may not fully cover extreme losses
• Yield calculations vulnerable to flash loan manipulation
• No protection against coordinated vault drain attacks
• Rebalancing requires manual intervention

1. Detection: Automated monitoring alerts on anomalous behavior
2. Assessment: Evaluate severity and potential impact
3. Containment: Activate emergency pause on affected contracts
4. Recovery: Execute recovery procedures based on incident type
5. Post-Mortem: Document lessons learned and update controls

• emergencyPause() on all contracts halts operations
• slashValidator() removes malicious validators
• emergencyCancel() refunds grant pools if needed
• Multi-sig admin controls prevent single points of failure

• Time-locked withdrawals allow dispute resolution
• Insurance fund covers small slashing events
• Validator exit mechanisms prevent forced participation
• Disclosure controls balance privacy with compliance

• All functions use appropriate access controls
• Reentrancy protection on state-changing functions
• Integer overflow protection verified
• External calls handled safely with proper error handling
• Emergency pause mechanisms tested
• Upgrade mechanisms secured with time locks

• FHE operations audited by Zama team
• Signature verification logic reviewed
• Key management procedures documented
• Randomness sources evaluated for bias
• Privacy guarantees formally verified

• Game theory analysis of validator incentives
• Slashing economics prevent profitable attacks
• Vault yield calculations audited for manipulation
• Fee structures reviewed for economic sustainability
• Oracle manipulation resistance verified

• Multi-sig procedures documented and tested
• Key management practices established
• Incident response procedures tested
• Monitoring and alerting systems operational
• Backup and recovery procedures validated

• Total vault assets always equal sum of tranche balances plus insurance fund
• Validator stake always matches on-chain balance
• Payment escrow balance equals sum of pending payment amounts
• Encrypted balances can only be revealed through authorized disclosure

• Active validator count never drops below minimum threshold
• Validation requests expire within configured timeout
• Slashing always follows waterfall order (Junior → Mezzanine → Senior)
• Privacy settings cannot be retroactively modified

• All contract functions tested with edge cases
• Access control boundaries verified
• Error conditions properly handled
• State transitions validated

• Cross-contract interactions tested
• End-to-end payment flows verified
• Validator consensus mechanisms validated
• Privacy disclosure workflows tested

• Reentrancy attack scenarios
• Integer overflow/underflow attempts
• Access control bypass attempts
• Economic attack simulations

• Use deterministic deployment for consistent addresses
• Verify contract source code on block explorers
• Initialize contracts with secure default parameters
• Transfer ownership to multi-sig wallet immediately

• Validator nodes run on hardened systems
• Private keys stored in hardware security modules
• Network traffic encrypted and authenticated
• Regular security updates and monitoring

• Funds at immediate risk of loss
• Privacy completely compromised
• Validator network consensus failure
• Contract upgrade controls compromised

• Partial fund loss possible
• Privacy partially compromised
• Individual validator compromise
• Service degradation affecting users

• Temporary service disruption
• Non-critical data exposure
• Performance degradation
• Configuration errors

• Minor UI/UX issues
• Documentation errors
• Non-security-related bugs
• Monitoring gaps

For security issues:

• Critical Issues: Immediate disclosure to development team
• Non-Critical Issues: Standard GitHub issue reporting
• Responsible Disclosure: 90-day disclosure timeline for vulnerabilities

This document should be reviewed and updated with each major protocol upgrade.