Summary

The mint function in DebtToken.sol is responsible for minting DebtTokens when a user borrows funds from the protocol. However, the function incorrectly adds balanceIncrease to the amount, resulting in over minting. This leads to users receiving more DebtTokens than they actually should, increasing their debt and forcing them to pay excessive interest.

Vulnerability Details

Issue in the Code

amountToMint includes balanceIncrease, which represents accrued interest rather than the actual borrowed amount.
This leads to users owing more than they borrowed, leading to excessive debt accumulation.

Incorrect Minting

The function mints amountToMint instead of just amount, inflating the user’s debt.
Borrowers pay more interest than necessary.

Impact

Users are unfairly charged excessive interest.

Borrowers are discouraged from using the protocol, leading to a loss of users and liquidity for the protocol.

Tools Used

manual review

Recommendations

Remove the lines containing the logic for balanceIncrease and amountToMint.

In the _mint() function mint amount instead of amountToMint.