Summary

The _freeFunds function attempts to release a specified amount (_amount) of funds from the transmuter. If the transmuter has insufficient liquidity, it releases only the available funds, creating a potential discrepancy between the requested and released amounts. This difference is treated as a loss, which is passed on to the withdrawer. This mechanism risks realizing a "false loss" due to temporary liquidity shortages, negatively impacting the withdrawer's balance.

https://github.com/Cyfrin/2024-12-alchemix/blob/82798f4891e41959eef866bd1d4cb44fc1e26439/src/StrategyMainnet.sol#L136-L143

Impact

1. False Loss Realization: The withdrawer may bear an artificial loss caused by temporary liquidity constraints in the transmuter, not due to actual underlying asset performance or default.

2. User Dissatisfaction: Users experiencing reduced withdrawals due to liquidity shortages may lose trust in the protocol, perceiving it as unfair or inefficient.

Recommendations

1. Rollback on Insufficient Liquidity: Modify the _freeFunds function to revert the transaction if the transmuter cannot release the full _amount. This ensures no false losses are realized and allows the user to retry later when liquidity is restored.

   function _freeFunds(uint256 _amount) internal override {

   uint256 totalAvailable = transmuter.getUnexchangedBalance(address(this));

   require(totalAvailable >= _amount, "Insufficient liquidity in transmuter");

   transmuter.withdraw(_amount, address(this));

   }