Core Contracts

Summary

There is a global issue on closeLiquidation() and finalizeLiquidation() trigger condition.

Currently, there is a gracePeriod condition on closeLiquidation that should not be there. In a lending protocol, users should not be locked out of the possibility of repaying their debt. The protocol should let them be able to repay their debt even if the gracePeriod for liquidation is over.

Those users can be liquidated, but at least they still have the opportunity to repay their debt which is always good for protocol bad debt. Especially in the case of NFT that represents houses as they are less liquid than stablecoins.

Vulnerability Details

After gracePeriod, users are not able to repay their debt and avoid liquidation even if they are able to.

Impact

The protocol will accumulate bad debt and NFT handling when users could have repaid their debts. Currently, to avoid liquidation, a user needs to repay ALL his debts in one go, and houses are generally high amounts so it can take more time than anticipated to repay in full a debt.
As users can still be liquidated, it makes no sense to opt them out of the ability to repay and avoid liquidation

Tools Used

Manual

Recommendations

Remove the limitation on closeLiquidation() so that users can still have the opportunity to repay their debt and close liquidation even after gracePeriod is over