Foundry DeFi Stablecoin CodeHawks Audit Contest

Summary

Users are unable to maintain a heathy collateral ratio during sequencer failure.

Vulnerability Details

On the Optimism platform, if the sequencer is down, users have the ability to force transactions through from L1 after a 12-hour period. On Arbitrium, users can only have their transactions forced included in the core inbox after a 24-hour period when the sequencer is down.

This delay poses a risk of being liquidated while users are unable to maintain a heathy collateral ratio within that timeframe.

Impact

The impact of this vulnerability is that users' collateral ratio may be dropped to a unhealthy during the period when sequencer is down, consequently, user may be liquidated due to the inability to maintain a heathy collateral ratio.

Tools Used

Manual Review

Recommendations

To mitigate this issue, it is recommended to implement a grace period when the sequencer is down. During the grace period user should not be liquidated, thus providing an additional window of time for users to get collateral ratio to a healthy level.