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DuplicateA valid issue that is a duplicate of an issue with `Has Duplicates` labelMediumA Medium severity issue.RewardA payout will be made for this issue
The liquidationFee will be initially set to 0 but might be changed to 20-30% in the future. The way the fee is applied could result in unprofitable liquidations.
Root Cause
In the function _transferAssetsToLiquidator() the liquidationFee is applied directly on the asset amount to be liquidated.
This is an issue as currently the liquidationDiscount is 10%, if the liquidationFee was increased to 20% then the liquidators would end up receiving less value than they reimbursed and so be unprofitable.
Additionally if that change happened while a liquidation transaction was in the mempool the liquidator would receive less tokens than expected as he has no way to enforce the minimum to receive after fees.
Internal pre-conditions
Change of the liquidationFee to 20% or 30% as can be seen on the contest doc.
Liquidation transaction in the mempool during the change that was sent before the change.
External pre-conditions
No response
Attack Path
No response
Impact
The fee that will be set in the future will make liquidation unprofitable.
The fee update may frontrun a liquidation transaction and lead to a few unexpected unprofitable liquidations at the expense of the liquidators.
PoC
No response
Mitigation
Consider not allowing the liquidationFee to be bigger than the liquidationDiscountor applying the fee on the liquidationDiscount.
DuplicateA valid issue that is a duplicate of an issue with `Has Duplicates` labelMediumA Medium severity issue.RewardA payout will be made for this issue
HHK
Medium
liquidationFee
changes could affect liquidatorsSummary
The
liquidationFee
will be initially set to 0 but might be changed to 20-30% in the future. The way the fee is applied could result in unprofitable liquidations.Root Cause
In the function
_transferAssetsToLiquidator()
theliquidationFee
is applied directly on the asset amount to be liquidated.This is an issue as currently the
liquidationDiscount
is 10%, if theliquidationFee
was increased to 20% then the liquidators would end up receiving less value than they reimbursed and so be unprofitable.Additionally if that change happened while a liquidation transaction was in the mempool the liquidator would receive less tokens than expected as he has no way to enforce the minimum to receive after fees.
Internal pre-conditions
liquidationFee
to 20% or 30% as can be seen on the contest doc.External pre-conditions
No response
Attack Path
No response
Impact
PoC
No response
Mitigation
Consider not allowing the
liquidationFee
to be bigger than theliquidationDiscount
or applying the fee on theliquidationDiscount
.Duplicate of #91
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