Summary
When a user's position is liquidated, his NFTs are transferred to the stability pool. However, the stability pool has no functionality implemented to transfer the NFTs, therefore they are stuck forever.
Vulnerability Details
The entry point for liquidations is in StabilityPool.sol:L449. After performing some logic, the finalizeLiquidation(address)function is called on lendingPool.
function liquidateBorrower(address userAddress) external onlyManagerOrOwner nonReentrant whenNotPaused {
_update();
uint256 userDebt = lendingPool.getUserDebt(userAddress);
uint256 scaledUserDebt = WadRayMath.rayMul(userDebt, lendingPool.getNormalizedDebt());
if (userDebt == 0) revert InvalidAmount();
uint256 crvUSDBalance = crvUSDToken.balanceOf(address(this));
if (crvUSDBalance < scaledUserDebt) revert InsufficientBalance();
bool approveSuccess = crvUSDToken.approve(address(lendingPool), scaledUserDebt);
if (!approveSuccess) revert ApprovalFailed();
lendingPool.updateState();
lendingPool.finalizeLiquidation(userAddress);
emit BorrowerLiquidated(userAddress, scaledUserDebt);
}
This function is in LendingPool.sol:L496. The liquidated NFT will be transferred to the stability pool, however, stability pool does not implement any further logic to handle the received NFTs, therefore they will forever be stuck in this contract.
function finalizeLiquidation(address userAddress) external nonReentrant onlyStabilityPool {
if (!isUnderLiquidation[userAddress]) revert NotUnderLiquidation();
ReserveLibrary.updateReserveState(reserve, rateData);
if (block.timestamp <= liquidationStartTime[userAddress] + liquidationGracePeriod) {
revert GracePeriodNotExpired();
}
UserData storage user = userData[userAddress];
uint256 userDebt = user.scaledDebtBalance.rayMul(reserve.usageIndex);
isUnderLiquidation[userAddress] = false;
liquidationStartTime[userAddress] = 0;
for (uint256 i = 0; i < user.nftTokenIds.length; i++) {
uint256 tokenId = user.nftTokenIds[i];
user.depositedNFTs[tokenId] = false;
raacNFT.transferFrom(address(this), stabilityPool, tokenId);
}
delete user.nftTokenIds;
(uint256 amountScaled, uint256 newTotalSupply, uint256 amountBurned, uint256 balanceIncrease) = IDebtToken(reserve.reserveDebtTokenAddress).burn(userAddress, userDebt, reserve.usageIndex);
IERC20(reserve.reserveAssetAddress).safeTransferFrom(msg.sender, reserve.reserveRTokenAddress, amountScaled);
user.scaledDebtBalance -= amountBurned;
reserve.totalUsage = newTotalSupply;
ReserveLibrary.updateInterestRatesAndLiquidity(reserve, rateData, amountScaled, 0);
emit LiquidationFinalized(stabilityPool, userAddress, userDebt, getUserCollateralValue(userAddress));
}
Impact
Liquidated NFTs stay in the stability pool forever, leading to financial risk for the protocol, as the liquidated assets are usually sold to cover an unhealthy debt.
Tools Used
Recommendations
The logic for NFT liquidations is implemented in the out of scope item NFTLiquidator.sol. Ensure that stability pool also implements the necessary integrations with the other contract, so that liquidations can proceed correctly.
function liquidateBorrower(address userAddress) external onlyManagerOrOwner nonReentrant whenNotPaused {
_update();
uint256 userDebt = lendingPool.getUserDebt(userAddress);
uint256 scaledUserDebt = WadRayMath.rayMul(userDebt, lendingPool.getNormalizedDebt());
if (userDebt == 0) revert InvalidAmount();
uint256 crvUSDBalance = crvUSDToken.balanceOf(address(this));
if (crvUSDBalance < scaledUserDebt) revert InsufficientBalance();
bool approveSuccess = crvUSDToken.approve(address(lendingPool), scaledUserDebt);
if (!approveSuccess) revert ApprovalFailed();
lendingPool.updateState();
nftData = lendingPool.finalizeLiquidation(userAddress);
nftLiquidator.liquidateNFT(tokenId, userDebt)
emit BorrowerLiquidated(userAddress, scaledUserDebt);
}
