The Standard

Summary

The runLiquidation function within the provided Solidity contract initiates the liquidation process of a vault. However, there is an observed lack of explicit management for cumulative reward increases over multiple liquidations. The absence of a mechanism to accumulate rewards within the function raises concerns about the potential impact on the protocol's reward system.

Vulnerability Details

This absence of cumulative reward handling poses a notable risk to the intended reward distribution model of the protocol. Without a mechanism to systematically accumulate rewards with each liquidation, the economic incentives for users may not align with the anticipated model, potentially resulting in discrepancies in the distribution of rewards. The bug calls for a thorough review and modification of the smartVaultManager contract, focusing on the liquidateVault function, to implement a robust mechanism for cumulative reward management. Additionally, adjustments to the runLiquidation function are necessary to ensure the proper orchestration of reward updates in alignment with the protocol's economic objectives.

The runLiquidation function is designed to trigger the liquidation process of a vault using the liquidateVault function from the external smartVaultManager contract. However, the function lacks explicit logic to manage or increase rewards cumulatively over multiple liquidations.

Impact

The impact of this issue is that the absence of cumulative reward handling in runLiquidation may result in a failure to increase rewards as intended over successive liquidations. This could potentially undermine the economic incentives and disrupt the expected reward distribution model of the protocol.

Tools Used

Manual

Recommendations

Implement a mechanism for tracking and accumulating rewards across multiple liquidations.