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

User can be liquidated even though his health factor is above 1.

ke1caM

Summary

When user's health factor drops below 1, his position can be marked as liquidable. In this time user can repay his debt or deposit more collateral (more NFTs) to increase his health factor. However during liquidation the health factor is not checked and user can be liquidated even when his HF is above 1.

Vulnerability Details

When user's HF is under 1, anyone can call initiateLiquidation function. This function checks user's HF and sets isUnderLiquidation to true is it is below 1.

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);
}

During grace period user can increase his collateral value or repay his debt. However his postion can still be liquidated using finalizeLiquidation function. This function does not check user's health factor but checks if he is marked as liquidable.

function finalizeLiquidation(address userAddress) external nonReentrant onlyStabilityPool {
if (!isUnderLiquidation[userAddress]) revert NotUnderLiquidation();
​
// update state
ReserveLibrary.updateReserveState(reserve, rateData);
​
if (block.timestamp <= liquidationStartTime[userAddress] + liquidationGracePeriod) {
revert GracePeriodNotExpired();
}
​
UserData storage user = userData[userAddress];
​
uint256 userDebt = user.scaledDebtBalance.rayMul(reserve.usageIndex);
​
isUnderLiquidation[userAddress] = false;
liquidationStartTime[userAddress] = 0;
// Transfer NFTs to Stability Pool
for (uint256 i = 0; i < user.nftTokenIds.length; i++) {
uint256 tokenId = user.nftTokenIds[i];
user.depositedNFTs[tokenId] = false;
raacNFT.transferFrom(address(this), stabilityPool, tokenId);
}
delete user.nftTokenIds;
​
// Burn DebtTokens from the user
(uint256 amountScaled, uint256 newTotalSupply, uint256 amountBurned, uint256 balanceIncrease) = IDebtToken(reserve.reserveDebtTokenAddress).burn(userAddress, userDebt, reserve.usageIndex);
​
// Transfer reserve assets from Stability Pool to cover the debt
IERC20(reserve.reserveAssetAddress).safeTransferFrom(msg.sender, reserve.reserveRTokenAddress, amountScaled);
​
// Update user's scaled debt balance
user.scaledDebtBalance -= amountBurned;
reserve.totalUsage = newTotalSupply;
​
// Update liquidity and interest rates
ReserveLibrary.updateInterestRatesAndLiquidity(reserve, rateData, amountScaled, 0);
​
​
emit LiquidationFinalized(stabilityPool, userAddress, userDebt, getUserCollateralValue(userAddress));
}

User's HF can be aboove 1 but can still be liquidated which leads to loss of funds for user.

Impact

User can be liquidated when his Health Factor is at correct level. This leads to loss of funds as user is not being rightfuly liquiidated.

Tools Used

Manual Review, Hardhat

Recommendations

Before liquidation check user's health factor. If it is above 1 revert the liquidation call.

Updates

Lead Judging Commences

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

LendingPool::finalizeLiquidation() never checks if debt is still unhealthy

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