Beanstalk Part 1

Summary

The current implementation allows users to mint Fertilizer tokens using collateral assets at 100% of their value based on Oracle prices without any fees. This exposes the system to risks of arbitrage exploitation and may lead to a decrease in the quality of collateral for Fertilizer.

Note: While the mintFertilizer function itself is out of scope, the Oracle it relies on, specifically LibEthUsdOracle.getEthUsdPrice, is within scope due to its potential to produce issues.

Impact

The Oracle price can not be trusted as the real-time price.

For example, the BTC/USD and ETH/USD price feeds on miannet have a "Deviation threshold" of 0.5%, meaning that the price will only be updated once the price movement exceeds 0.5% within the heartbeat period.

1. Arbitrage Exploitation: Without imposing a minting fee or considering the potential deviation in Oracle prices, users can exploit price differences between the collateral assets and their actual market value. This can lead to excessive minting of Fertilizer tokens without proper collateral backing, ultimately compromising the stability and integrity of the system.

2. Quality of Collateral: Continuous minting of Fertilizer tokens without considering the actual market value of collateral assets may result in a decrease in the quality of collateral backing the tokens. This could lead to a situation where the value of the collateral is insufficient to cover the value of the minted Fertilizer tokens, posing a significant risk to the overall stability of the system.

3. Oracle Price Reliability: The reliance on Oracle prices without considering their real-time accuracy or potential deviations introduces uncertainty into the minting process. Users may inadvertently rely on outdated or inaccurate price information, further exacerbating the risks associated with arbitrage and collateral quality.

Recommendation

Consider adding a minting fee of 0.5% to 1% (it should be higher than the deviation)