The Standard

Summary

LiquidationPoolManager.runLiquidation may revert for some tokens.

Vulnerability Details

When LiquidationPoolManager.runLiquidation is called, then it will liquidate some vault and liquidated collateral will be sent to the LiquidationPoolManager contract. Then function loops through all assets and calculates amount that it has. Then it approves those tokens to the pool.

When LiquidationPool(pool).distributeAssets is called, then all approved tokens are trying to be sold for the pool stakes holders. Portion by portion those assets are sent to the holders. But it is possible that not whole amount will buyed by pool. That's why we have forwardRemainingRewards call to send those tokens to the treasury.

In case if not whole amount was bought, then it means that not whole allowance was used. Also it means that when next time approve will be called for some tokens like USDT, then it will revert, because previous allowance was not fully used. As result function will stop working for USDT and liquidations will fail which will create bad debt.

Impact

Liquidation will stop working.

Tools Used

VsCode

Recommendations

Reset allowance to 0 before next approve.