DittoETH

Summary

The protocol allows users to flag positions that fall below the primary collateral ratio. Once flagged, if the position stays below this ratio, the flagger obtains the right to liquidate the position after a specified duration.

According to the protocol's documentation:

‘To halt the liquidation timer and remove the flag, the shorter must reach the target maintenance margin collateral ratio (200%) either through favourable price movements or by injecting additional collateral.’

However, the system does not have functionality to allow the reset of flags even when the price moves favourably, and the user’s position reaches the target maintenance margin collateral ratio (CR). This discrepancy implies that, during the flag duration, users could experience instant liquidation by the flagger or any one else without warning, even if their positions had reached a healthy state after being flagged.

Vulnerability Details/Impact

Users, even with healthy positions, may be compelled to add additional collateral, merge shorts, or invoke the exit function to reset the flag. This limitation implies that the flag cannot be reset unless users modify their positions, a condition that contradicts the stated documentation.

Tools Used

Manual analysis

Recommendations

Revise the flagShort function or introduce a new mechanism allowing users to manually reset the flag on their positions once they have regained a healthy state.