DeFiFoundry
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Submission Details
Severity: medium
Invalid

Inability to perform partial liquidations allows huge positions to accrue bad debt in the system

Summary

This finding is aspired by Inability to perform partial liquidations allows huge positions to accrue bad debt in the system with changes to fit Zaros.

The liquidateAccounts() function allows liquidators to liquidate accounts and receive collateral in return.

The issue is that the current functionality only allows liquidating the whole positions of accounts. This means that partial liquidations cannot be performed and prevents liquidators from liquidating whale accounts that hold huge positions in the system.

Vulnerability Details

In the liquidateAccounts() function, we can see it liquidates the entiretradingAccountId instead of allowing the liquidator to supply a specific amount they can be liquidated to improve the collateral ratio of the id and the overall health of the system.

Impact

Since the liquidations cannot be performed unless the liquidator can match upto the collateral deposited by the whale, the system will be undercollaterized causing bad debt to accrue.

The effect of this issue will increase as more such positions exist in the system that cannot be liquidated by the liquidators.

Tools Used

vscode

Recommendations

Implement a mechanism to allow liquidators to partially liquidate positions. This would also require refactoring the collateral paid out to them based on the amount they cover.

Updates

Lead Judging Commences

inallhonesty Lead Judge
about 1 year ago
inallhonesty Lead Judge about 1 year ago
Submission Judgement Published
Invalidated
Reason: Incorrect statement

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