TELxIP - Uniswap V4 hooks audit

Council Proposals TELxIP
1

TELxIP - Uniswap V4 hooks audit

Abstract

This proposal seeks approval from the TELx Council to fund a third-party security audit of a custom Uniswap V4 hook smart contract intended to manage TEL reward distribution to LPs in the TEL/ETH (and future TELx Uniswap V4) pool(s) on Polygon (and other EVM blockchains). The cost of the audit is $19,411.76 and will be paid in USDC from proceeds of the sale of TEL from the TELx Safe. This audit will ensure the secure operation of incentive mechanisms tied to the newly established TEL/ETH Uniswap V4 pool.

Specification

  • Audit Scope: A security review of a Uniswap V4 hook smart contract, which programmatically manages TEL rewards based on LP behavior in the TEL/ETH pool.

  • Audit Firm: A third-party firm has quoted $19,411.76 for the engagement.

  • Payment Method: USDC originating from the sale of TEL within the TELx Safe.

  • Motivation: With the deprecation of the TEL/BAL and TEL/DFX/USDC staking contracts on June 5th 2025, 5,555,556 TEL (with a current value of ~24k USD) in emissions will not be distributed in June. This provides a good opportunity to fund vital infrastructure for future liquidity pools.

  • Security Importance: The hook contract directly interacts with TEL rewards and LP data. Auditing it is critical to prevent vulnerabilities that could compromise funds or impact the integrity of TELx incentives.

Rationale

This audit builds on an earlier TELxIP to migrate liquidity incentives from underutilized Balancer pools to more modern Uniswap V4 infrastructure. Given the complexity of Uniswap V4’s hooks architecture—and the fact that this custom contract manages token transfers—the risk of exploitation must be minimized.

Auditing this contract:

  • Ensures best practices in smart contract development.

  • Demonstrates Telcoin Association’s commitment to user safety.

  • Reinforces trust in TELx as a secure, well-managed ecosystem.

This also sets precedent for how the TELx Council handles smart contract upgrades and user-facing features going forward.

Implementation

Responsible Parties:

  • Proposal Author: Mike McNearney

  • Smart Contract Developer: Amir Shirif

  • Audit Partner: Cantina

Steps:

  1. Execute TEL transfer from TELx Safe to external sale wallet.

  2. Transfer $19,411.76 in USDC from external sale wallet to auditor.

  3. Developer shares deployment and documentation materials with auditor.

  4. Audit firm delivers findings and recommendations.

  5. TAO or designated developer implements fixes, if required.

  6. Publish audit results publicly (with sensitive info redacted if necessary).

Timeline:

  • Audit engagement: Within 5 days of proposal affirmation.

  • Audit duration: ~2.5 days

  • Implementation of fixes: Within 7 days after final report.

Expected Outcomes

  • Audited and secure hook contract for TEL/ETH Uniswap V4 pool.

  • Safe distribution of incentives to LPs.

  • TELx credibility strengthened by adherence to security standards.

  • Precedent established for auditing all future smart contracts deployed by TELx Council or partners.

TEL Source and Budget Impact

  • Source of Funds: TELx Council Safe

  • Amount Requested: ~$19,411.76 in TEL

Offset by Emission Reduction: No TEL incentives are currently being distributed to TEL/BAL and TEL/DFX/USDC pools (~5.5M TEL/month saved). This audit uses a fraction of that conserved TEL.

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