Kirkeelee - Liquidation bots frontrunning users repaying debt after unpausing.

[sherlock-admin4]

Kirkeelee

medium

Liquidation bots frontrunning users repaying debt after unpausing.

Summary

Race condition may emerge between users and liquidation bots when the protocol paused and then unpauses the functions repay() and liquidate() in Market.sol. This may lead to users unable to pay their debt and be liquidated.

Vulnerability Detail

Functions repay() and liquidate() in Market.sol have modifier "whenNotPaused" in order to prevent users from altering their positions when protocol is paused in certain situations. unpause() function sets the pause state to false when threat is gone according to the code documentation. Positions of user may become eligible for liquidation during the paused state and after unpausing they may be liquidated before they are able to repay their debt. Most users use liquidation bots in open markets and the current protocol also has its own bot that monitors the user positions. It is certain that user cannot frontrun bots in these situations and their positions will be liquidated by bots leading to the loss of funds of the user.

Impact

Users unable to pay their debt before the bots when the protocol unpauses and loose funds.

Code Snippet

https://github.com/sherlock-audit/2024-04-interest-rate-model/blob/main/protocol/contracts/Market.sol#L176-L183

https://github.com/sherlock-audit/2024-04-interest-rate-model/blob/main/protocol/contracts/Market.sol#L545-L549

Tool used

Manual Review

Recommendation

Prevent liquidation after a certain period of time when the protocol is unpaused. An example of similar issue and the fix can be found here.

[santipu03]

This issue is invalid following the Sherlock guidelines:

An admin action can break certain assumptions about the functioning of the code. Example: Pausing a collateral causes some users to be unfairly liquidated or any other action causing loss of funds. This is not considered a valid issue.