DittoETH

Summary

The protocol has not implemented any feature to protect shorters from sudden asset prices falls that can expose their positions/collateral. Sudden price falls are usually a reflection of market crushes caused by Oracles hacks, massive token minting and dumping etc

Vulnerability Details

When the price of assets used in the protocol collapses, shorters have no protection against liquidation except by further collaterization. Even the 10h allowance given to shorter before liquidation to reinstate equilibrium might not be sufficient.

Impact

Shorters risk losing collateral to liquidators, further jeopardizing the protocol

Tools Used

Manual review

Recommendations

We recommend adding a pause functionality that can be activated during emergency times that will halt all liquidations until a situation of normalcy in the markets is regained. This can be implemented as follows:

1. Add a state variable in AppStorage.sol

`
bool liquidationPaused;

`

2. Add an access controlled function that enables admin to pause/unpause liquidations

`
function pauseUnpauseLiquidations() external onlyDAO {
if(liquidationPaused)
liquidationPaused = false;
else
liquidationPaused = true;
}

3. Inside the liquidate function, check that liquidations are allowed

`
require(!liquidationPaused, "Liquidations are not allowed at this time");