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

Modifying of grace period can lead to unfair liquidations

avci

Summary

The LendingPool contract allows the owner to modify the liquidation grace period after a liquidation has been initiated. This can lead to unexpected and unfair liquidations if the owner reduces the grace period, causing it to expire immediately for users who are already under liquidation.

Vulnerability Details

In the LendingPool contract, when a user is put under liquidation, they have a grace period to repay their debt and avoid liquidation. However, the owner has the ability to change this grace period at any time through the setParameter() function:

function setParameter(OwnerParameter param, uint256 newValue) external override onlyOwner {
if (param == OwnerParameter.LiquidationGracePeriod) {
require(newValue >= 1 days && newValue <= 7 days, "Invalid grace period");
liquidationGracePeriod = newValue;
emit LiquidationParametersUpdated(liquidationThreshold, healthFactorLiquidationThreshold, liquidationGracePeriod);
}
// ...other parameters
}

The closeLiquidation() function where the grace period check uses the current liquidationGracePeriod value rather than the value that was in effect when the liquidation was initiated:

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();
}
// ...rest of the function
}

Unfair scenario:

  • User A gets liquidated with a 3-day grace period

  • After 2 days, the owner changes the grace period to 1 day

  • User A's grace period immediately expires even though they should have 1 more day to repay

  • The liquidation can be finalized immediately, resulting in an unfair liquidation

Impact

Users can unexpectedly lose their grace period due to owner actions

Tools Used

Manual Review

Recommendations

Store the grace period duration with the liquidation data when liquidation is initiated:

// Store current grace period with the liquidation
liquidationGracePeriods[userAddress] = liquidationGracePeriod;
Updates

Lead Judging Commences

inallhonesty Lead Judge 3 months ago
Submission Judgement Published
Invalidated
Reason: Non-acceptable severity

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