The Standard

Summary

No incentive to liquidate vaults with low collateral due to gas cost

Vulnerability Details

Similar to https://www.codehawks.com/report/cljx3b9390009liqwuedkn0m0#H-03

When minting the tokens, users can mint EUR for collateral value as low as collateral worth 2 EUR since there is no minimum collateral required and open as many vaults as they want, though there is no profit incentive for the attacker.

The gas cost is thus greater than the possible profit from liquidating the position. This leads to to a loss of funds to paying gas fees for the liquidator pool if they attempt to liquidate or sizeable bad debt if many of such vaults are opened and no one liquidates it.

Impact

No incentive to liquidate low collateral vaults for the liquidator resulting in bad debt.

Tools Used

Manual Review

Recommendations

Add a check for a minimum number of collateral before user can mint tokens.