Pausable Tokens can break the logic of Under-collateralized Positions leading to loss of funds.
Summary
Such tokens (BNB, ZIL) have a Pausable mechanism implemented that allows an admin controlled address to pause token usage/transfers.
Vulnerability Details
Pausable tokens such as ZIL can break the Liquidation Logic of the protocol if vault is under-collateralised, user can swap all his tokens to the pausable one and if it get paused the vault can't get liquidated. Making the loss of funds in the pool.
Impact
Loss of funds if a pool can not be liquidated.
Tools Used
Manual Review
Recommendation
Alerting users on potential risks of a pausable token would be great. Also, disallowing such tokens to be used as collateral using a disallowedToken array/mapping would be a great fix as well.
Lead Judging Commences
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