Summary

When a customer tries to borrow from a pool, an operator can front-runs the transaction, borrowing a large sum, causing a liquidity shortage. The customer's borrow attempt will fail due to insufficient funds. The operator then backruns the failed transaction, repaying the loan. This prevents the customer from borrowing and prevents the lender from earning interest.

Vulnerability Details

1. Customer attempts to borrow from a given pool.

2. Operator front run’s customer and borrows a large amount of funds from pool

3. Customers borrow fails because there isn’t enough liquidity in the pool to cover his loan

4. Operator backruns customers failed borrow transaction to repay the loan

Impact

DoS that prevent customers from taking out a loan and lenders from earning interest

Tools Used

manual

Recommendations

Include a minimum interest fee if the loan duration is less than a certain time to discourage this behavior.