Summary

Due to increase in gas costs, there is no incentive for the liquidators to liquidate accounts having minimal values, lets say 5 EUR.

Vulnerability Details

Liquidators liquidate users for the profit they can make. If there is no profit to be made than there will be no one to call the liquidate function. Lets say there is an account having 6 EUR worth of collateral and 5 KittyCoins minted. This user is undercollateralized and must be liquidated in order to ensure that the protocol remains overcollateralized. Because the value of the account is so low, after gas costs, liquidators will not make a profit liquidating this user.

In the end these low value accounts will never get liquidated, leaving the protocol with bad debt and can even cause the protocol to be undercollateralized with enough small value accounts being underwater.

Impact

A large number of dust account could bring bad debts to the protocol

Tools Used

Manual Review

Recommendations

Try adding a minimum minting threshold. This will eliminate the accounts with minimal values, protecting the protocol from being in debt.