Part 2

In the _updateCreditDelegations() function, credit delegation updates rely solely on the provided connectedMarketsIdsCache, failing to account for markets that were previously delegated credit but have since been removed. This creates a scenario where removed markets retain their previous credit delegation balance, leading to an overestimation of available credit for remaining markets. The function updates delegation values as follows:

However, if a market is no longer connected, it does not receive an update, preserving its old delegation value, effectively double-counting credit allocations. This can lead to situations where more credit is distributed than the vault actually possesses, resulting in under-collateralization and potential fund mismanagement.

Impact:

The vault may allocate more credit than it actually holds, leading to insolvency risks and potential fund misallocation to markets that should no longer be receiving credit.

Mitigation:

Explicitly iterate over all previously connected markets and reset credit delegation for any markets no longer present in the updated connectedMarkets list.