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

User can steal from pool

ke1caM

Summary

User can take out undercollateralized loam from pool effectively stealing funds from the protocol.

Vulnerability Details

To borrow tokens, first user needs to deposit house NFT. To take out a loan with NFT as collateral user has to call borrow function. The issue with borrow function is that, it incorrectly validates the Health Factor after to loan is taken out. As a result user can steal money from the protcol.

function borrow(uint256 amount) external nonReentrant whenNotPaused onlyValidAmount(amount) {
if (isUnderLiquidation[msg.sender]) revert CannotBorrowUnderLiquidation();
​
UserData storage user = userData[msg.sender];
​
uint256 collateralValue = getUserCollateralValue(msg.sender);
​
if (collateralValue == 0) revert NoCollateral();
​
// Update reserve state before borrowing
ReserveLibrary.updateReserveState(reserve, rateData);
​
// Ensure sufficient liquidity is available
_ensureLiquidity(amount);
​
// Fetch user's total debt after borrowing
uint256 userTotalDebt = user.scaledDebtBalance.rayMul(reserve.usageIndex) + amount;
​
// Ensure the user has enough collateral to cover the new debt
if (collateralValue < userTotalDebt.percentMul(liquidationThreshold)) {
revert NotEnoughCollateralToBorrow();
}
​
// Update user's scaled debt balance
uint256 scaledAmount = amount.rayDiv(reserve.usageIndex);
​
​
// Mint DebtTokens to the user (scaled amount)
(bool isFirstMint, uint256 amountMinted, uint256 newTotalSupply) = IDebtToken(reserve.reserveDebtTokenAddress).mint(msg.sender, msg.sender, amount, reserve.usageIndex);
​
// Transfer borrowed amount to user
IRToken(reserve.reserveRTokenAddress).transferAsset(msg.sender, amount);
​
user.scaledDebtBalance += scaledAmount;
// reserve.totalUsage += amount;
reserve.totalUsage = newTotalSupply;
​
// Update liquidity and interest rates
ReserveLibrary.updateInterestRatesAndLiquidity(reserve, rateData, 0, amount);
​
// Rebalance liquidity after borrowing
_rebalanceLiquidity();
​
emit Borrow(msg.sender, amount);
}
// Ensure the user has enough collateral to cover the new debt
if (collateralValue < userTotalDebt.percentMul(liquidationThreshold)) {
revert NotEnoughCollateralToBorrow();
}

liquidationThreshold is set to 80% in BPS which means that user only needs to have 80% of the collateral to take out the loan. This set up allows user to take out undercollateralized loans.

Impact

User can steal tokens from protocol using undercollateralized loans.

Tools Used

Manual Review, Hardhat

Recommendations

To fix this issue you should change the collateral value check. DIvide user debt by liquidation threshold instead of multiplying.

Updates

Lead Judging Commences

inallhonesty Lead Judge 6 months ago
Submission Judgement Published
Validated
Assigned finding tags:

LendingPool::borrow as well as withdrawNFT() reverses collateralization check, comparing collateral < debt*0.8 instead of collateral*0.8 > debt, allowing 125% borrowing vs intended 80%

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