Core Contracts
Regnum Aurum Acquisition Corp
HardhatReal World AssetsNFT
77,280 USDC
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Submission Details
Severity: low
Valid

No incentive to liquidate will cause bad debt for the protocol

s4muraii77

Summary

No incentive to liquidate will cause bad debt for the protocol

Vulnerability Details

In order to liquidate someone, LendingPool::initiateLiquidation() must be called:

function initiateLiquidation(address userAddress) external nonReentrant whenNotPaused {
if (isUnderLiquidation[userAddress]) revert UserAlreadyUnderLiquidation();
​
// update state
ReserveLibrary.updateReserveState(reserve, rateData);
​
UserData storage user = userData[userAddress];
​
uint256 healthFactor = calculateHealthFactor(userAddress);
​
if (healthFactor >= healthFactorLiquidationThreshold) revert HealthFactorTooLow();
​
isUnderLiquidation[userAddress] = true;
liquidationStartTime[userAddress] = block.timestamp;
​
emit LiquidationInitiated(msg.sender, userAddress);
}

The function initiates a liquidation which will can then be finalized after the grace period. As seen, there is no incentive for anyone to call the function which is a very important thing all liquidation functions should have. There is also no incentive given to the initiator when finalizing the liquidation which, without showing the code, can easily be confirmed by the fact that the initiator is not stored anywhere, we simply emit an event with him which is the only use of msg.sender in the function.

Impact

No one will be willing to initiate the liquidation which will lead to bad debt for the protocol

Tools Used

Manual Review

Recommendations

Incentivize users to initiate liquidations through a rewarding mechanism

Updates

Lead Judging Commences

inallhonesty Lead Judge 4 months ago
Submission Judgement Published
Invalidated
Reason: Non-acceptable severity
inallhonesty Lead Judge 4 months ago
Submission Judgement Published
Invalidated
Reason: Non-acceptable severity

Appeal created

s4muraii77 Submitter
4 months ago
s4muraii77 Submitter
4 months ago
inallhonesty Lead Judge 4 months ago
Submission Judgement Published
Validated
Assigned finding tags:

No incentive to liquidate

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