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

Healthy positions that were previously unhealthy can still become liquidated

CODESPECT

Summary

In LendingPool previously unhealthy positions that become healthy can still be liquidated.

Vulnerability Details

This is the closeLiquidation function which removes an address from being under liquidation if it repays its debt:

function closeLiquidation() external nonReentrant whenNotPaused {
address userAddress = msg.sender;
​
if (!isUnderLiquidation[userAddress]) revert NotUnderLiquidation();
​
// update state
ReserveLibrary.updateReserveState(reserve, rateData);
​
if (block.timestamp > liquidationStartTime[userAddress] + liquidationGracePeriod) {
revert GracePeriodExpired();
}
​
UserData storage user = userData[userAddress];
​
uint256 userDebt = user.scaledDebtBalance.rayMul(reserve.usageIndex);
​
if (userDebt > DUST_THRESHOLD) revert DebtNotZero();
​
isUnderLiquidation[userAddress] = false;
liquidationStartTime[userAddress] = 0;
​
emit LiquidationClosed(userAddress);
}

However, there are some issues. Previously unhealthy positions that become healthy can be liquidated in 3 different scenarios:

  1. User partially pays his debt, making his position healthy. However, he can't close the liquidation if the doesn't pay the full amount and is now subject to full liquidation even though he repaid some amount. This is because this check if (userDebt > DUST_THRESHOLD) revert DebtNotZero();.

  2. User's NFT temporarily falls in value with result of him becoming under liquidation. However, his NFT goes up in price again and now his position is healthy. User is forced to repay the whole position to closeLiquidation even though his position is healthy.

  3. User repays the full amount but doesn't call closeLiquidation. This could be due to him forgetting or being a contract which hasn't implemented this functionality, since msg.sender must be the under liquidation address. This healthy address will still get liquidated since there is no health factor check in the finalizeLiquidation function:

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));
}

Impact

Healthy addresses can get unfairly liquidated and lose their NFTs.

Tools Used

Manual review

Recommendations

Just add a health factor check in the finalizeLiquidation function so healthy positions are not liquidatable.

Updates

Lead Judging Commences

inallhonesty Lead Judge 7 months ago
Submission Judgement Published
Validated
Assigned finding tags:

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

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