Part 2
Zaros
PerpetualsDEXFoundrySolidity
70,000 USDC
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Submission Details
Severity: medium
Invalid

Potential failure during vault debt settlement due to insufficient asset coverage

tigerfrake

Summary

The settleVaultsDebt() function in the vault management system attempts to swap the vault's assets for USDC to cover any unsettled debt. However, there is a risk that the calculated swap amount may exceed the actual available assets in the vault, leading to potential transaction failures as this is not handled gracefully.

Vulnerability Details

In the current implementation, the function calculates the amount of assets to swap using the calculateSwapAmount() function. This calculated swapAmount is then used in the _convertAssetsToUsdc() function to approve and execute the swap.

// @audit-info calculates the amount of assets to swap
>. ctx.swapAmount = calculateSwapAmount(
dexSwapStrategy.dexAdapter,
ctx.usdc,
ctx.vaultAsset,
usdcCollateralConfig.convertSd59x18ToTokenAmount(ctx.vaultUnsettledRealizedDebtUsdX18.abs())
);
​
// @audit-info Attempt to convert assets to USDC directly
>> ctx.usdcOut = _convertAssetsToUsdc(
vault.swapStrategy.usdcDexSwapStrategyId,
ctx.vaultAsset,
ctx.swapAmount,
vault.swapStrategy.usdcDexSwapPath,
address(this),
ctx.usdc
);

Notice that within the _convertAssetsToUsdc(), the dexAdapter is approved to spend the swapAmount calculated above:

// approve the asset to be spent by the dex adapter contract
DexSwapStrategy.Data storage dexSwapStrategy = DexSwapStrategy.loadExisting(dexSwapStrategyId);
>> IERC20(asset).approve(dexSwapStrategy.dexAdapter, assetAmount);

If the swapAmount exceeds the vault's available assets, the approval will fail when the dexAdapter attempts to pull this amount, resulting in a transaction failure.

Impact

If the calculated swapAmount exceeds the available assets in the vault, the transaction will fail. This could lead to a situation where the vault remains in debt, as the intended asset conversion to cover the debt would not occur.

Tools Used

Manual Review

Recommendations

Implement a mechanism to use the available assets amount if it cannot fully clear the debt.

ctx.swapAmount = calculateSwapAmount(
dexSwapStrategy.dexAdapter,
ctx.usdc,
ctx.vaultAsset,
usdcCollateralConfig.convertSd59x18ToTokenAmount(ctx.vaultUnsettledRealizedDebtUsdX18.abs())
);
// @audit Adjust to available amount
+ if (ctx.swapAmount > IERC20(ctx.vaultAsset).balanceOf(vault.indexToken)) {
+ ctx.swapAmount = IERC20(ctx.vaultAsset).balanceOf(vault.indexToken);
+ }
​
​
// @audit Proceed to convert assets to USDC
ctx.usdcOut = _convertAssetsToUsdc(
vault.swapStrategy.usdcDexSwapStrategyId,
ctx.vaultAsset,
ctx.swapAmount,
vault.swapStrategy.usdcDexSwapPath,
address(this),
ctx.usdc
);
Updates

Lead Judging Commences

inallhonesty Lead Judge
6 months ago
inallhonesty Lead Judge 5 months ago
Submission Judgement Published
Invalidated
Reason: Incorrect statement

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