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Calm Pine Robin

High

no minimum borrow amount can create bad debt

Summary

protocol does not enforce any minimum amount check for borrowers for borrowing this is ;problematic and will lead to bad debt build up when the borrowing position and collateral being small there is no incentive for liquidator to liquidate a position as the liquidation profit may not cover the cost of liquidating a position (gas cost) leaving bad debt in the protocol this a big problem itself however this is even more problematic considering the design of the protocol since borrowing increases the exchange rate which incentivises stakers overtime borrow positions accrue interest which is also added to the total borrowing which then directly impacts the exchange rate since the bad debt will never be cleared the borrow amount will stay in the contract accruing interest directly inflating the exchange rate with no real backing which will lead to inslovency for the protocol overtime

Root Cause

  1. here we can see there is no minimum borrow check https://github.com/sherlock-audit/2024-12-numa-audit/blob/main/Numa/contracts/lending/CToken.sol#L741-L788

  2. the borrow allowed also does not enforce any minimum borrow check https://github.com/sherlock-audit/2024-12-numa-audit/blob/ae1d7781efb4cb2c3a40c642887ddadeecabb97d/Numa/contracts/lending/NumaComptroller.sol#L420-L472

3.meanwhile the borrows accrue debt which is added to the total borrows https://github.com/sherlock-audit/2024-12-numa-audit/blob/main/Numa/contracts/lending/CToken.sol#L467 https://github.com/sherlock-audit/2024-12-numa-audit/blob/main/Numa/contracts/lending/CToken.sol#L487

4.the exchange rate is directly inflated because of this https://github.com/sherlock-audit/2024-12-numa-audit/blob/main/Numa/contracts/lending/CToken.sol#L379C1-L401C6

Internal pre-conditions

No response

External pre-conditions

No response

Attack Path

No response

Impact

liquidators will have no incentive to liquidate a small borrow position which will cause bad debt accrual for the protocol which will also lead to a bigger issue since the borrow debt is never written off overtime the borrow position will keep accruing interest on the borrow position which will directly inflate the exchange rate with no backing leading to insolvency for the protocol

PoC

No response

Mitigation

enforce a minimum borrow check