FLOW-4: ERC20 transfer failure creates permanently failing request

[liobrasil]

Severity: Medium

Files Affected

• cadence/contracts/FlowYieldVaultsEVM.cdc:1280-1283

Description

When bridging ERC20 tokens via bridgeERC20ToEVM, transfer failures cause panics. For WITHDRAW/CLOSE operations, if the ERC20 transfer persistently fails (recipient blacklisted, token paused), Flow's cross-VM atomicity reverts startProcessing, but every retry fails identically.

The request becomes permanently unprocessable, blocking the user's funds and queue slot.

Recommendation

Handle ERC20 transfer failures gracefully. Return funds to escrow and mark request as failed rather than creating an infinite retry loop.

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Parent Issue: #15

[vishalchangrani]

This will be addressed as part of the worker revamp that @nvdtf is working on.