Core Contracts

Summary

Liquidation Mechanism allows the HealthFactor to drop below Liquidation Threshold before Initialization of Liquidation

Vulnerability Details

The LendingPool contract's liquidation mechanism on https://github.com/Cyfrin/2025-02-raac/blob/main/contracts/core/pools/LendingPool/LendingPool.sol relies on external actors to initiate liquidations through the initiateLiquidation() function after a borrower's health factor falls below the threshold. This reactive approach, rather than a proactive one, creates a timing gap where the protocol is exposed to potential bad debt.

The affected function

Impact

This could result to a Bad debt if the collateral price drops Drastically.

Tools Used

manual review

Recommendations

You can Implement a keeper system to monitor health factors and trigger liquidations immediately when thresholds are breached.