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

DebtToken should not mint the increase of the balance

0xphantom

Summary

When a borrower repay his debt or borrow again tokens are minted without reason making the debt balance of the user making no sense.

Vulnerability Details

when a user become a borrower his balance increase algorithmically since the usage index increase consistently.

function balanceOf(address account) public view override(ERC20, IERC20) returns (uint256) {
uint256 scaledBalance = super.balanceOf(account);
return scaledBalance.rayMul(ILendingPool(_reservePool).getNormalizedDebt());
}
​

When debt tokens are minted the amount of the debt is divided by the current usage index as we can see here :

function _update(address from, address to, uint256 amount) internal virtual override {
if (from != address(0) && to != address(0)) {
revert TransfersNotAllowed(); // Only allow minting and burning
}
​
uint256 scaledAmount = amount.rayDiv(ILendingPool(_reservePool).getNormalizedDebt());
super._update(from, to, scaledAmount);
emit Transfer(from, to, amount);
}

A problem occur in the mint function since this function mint again the balance increase of the user which make no sense since the balance increase algorithically.

uint256 scaledBalance = balanceOf(onBehalfOf);
bool isFirstMint = scaledBalance == 0;
​
uint256 balanceIncrease = 0;
if (_userState[onBehalfOf].index != 0 && _userState[onBehalfOf].index < index) {
balanceIncrease = scaledBalance.rayMul(index) - scaledBalance.rayMul(_userState[onBehalfOf].index);
}
​
_userState[onBehalfOf].index = index.toUint128();
​
uint256 amountToMint = amount + balanceIncrease;
​
_mint(onBehalfOf, amountToMint.toUint128());

So debt token are minted without creation of any real debt breaking the purpose of the debt token.


Impact

Breaking the protocol calculation

Tools Used

Medusa

Recommendations

Don't mint the increase in the debt token.

Updates

Lead Judging Commences

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

DebtToken::mint miscalculates debt by applying interest twice, inflating borrow amounts and risking premature liquidations

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