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Elegant Steel Tarantula

Medium

Deficit accounting can be prevented by supplying 1 wei of a different collateral

Summary

Deficit accounting can be prevented by supplying 1 wei of a different collateral

Root Cause

Deficit accounting only occurs when hasNoCollateralLeft is true, but the liquidation only takes the collateral of one reserve. There is no incentive to carry out the 2nd liquidation on the 1 wei of other collateral.

Internal Pre-conditions

A position reaches a state of bad debt

External Pre-conditions

No response

Attack Path

  1. Position reaches state of bad debt
  2. Before the bad debt liquidation, the borrower supplies 1 wei of a different collateral to what is being liquidated
  3. Liquidation occurs, deficit accounting does not occur since hasNoCollateralLeft is false
  4. It is not economical to liquidate the dust of 1 wei, so the bad debt will remain, and the deficit will not be accounted, so executeEliminateDeficit() will not account for this bad debt

Impact

Deficit accounting is prevented, and the outstanding debt remains.

Mitigation