Part 2

Summary

The rebalanceVaultsAssets function in CreditDelegationBranch contains incorrect comparisons and absolute value calculations for vault debts. When a vault is in credit, its debt is negative, but the condition incorrectly reverts even when the vaults are in a valid state. Additionally, the absolute value is applied to the wrong variable, leading to incorrect calculations in the rebalancing logic.

Vulnerability Details

Wrong Comparison in Vault Debt Check

The checks enforces:

• The credit vault’s debt should be positive

• The debt vault’s debt should be negative
  Due to the incorrect condition, the function incorrectly reverts when vaults are actually in the correct state.

Vault in debt have more asset than deposited USDC. So inDebt vault will have more unsettled realized debt than zero. And inCredit vault will have less asset than USDC. Due to this check, when vaults are in correct state, the function will revert

Impact

• The function incorrectly reverts in cases where the vaults are already in the correct state.

• Rebalancing cannot proceed, which could prevent proper debt settlement and affect protocol stability.

Tools Used

• Manual code review

Recommendations

1. Fix the Debt Comparison Logic

Change:

This ensures that:

• The credit vault has a negative unsettled debt.

• The debt vault has a positive unsettled debt.