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GalloDaSballo / Apollon-Review

Notes for the Apollon Solo Security Review
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`RedemptionOperations` Redemptions should be disabled during Recovery Mode #77

Open GalloDaSballo opened 3 months ago

GalloDaSballo commented 3 months ago

Impact

RedemptionOperations checks the TCR < MCR, but should most likely check for TCR < CCR

https://github.com/blkswnStudio/ap/blob/8fab2b32b4f55efd92819bd1d0da9bed4b339e87/packages/contracts/contracts/RedemptionOperations.sol#L101-L103

    (, uint TCR, , ) = storagePool.checkRecoveryMode(vars.priceCache); /// @audit High? not checking RM -> Mint for free, Inflate total supply (pay no redemption), redeem at small fee
    if (TCR < MCR) revert LessThanMCR(); /// @audit-ok force to liquidate if all system is insolvent

This is because during Recovery Mode, minting fees are voided, meaning that the system may open up to additional arbitrages via Redemptions

Redemptions are generally disabled during RM in favour of liquidations

Mitigation

Investigate if additional arbitrages could be detrimental to your protocol due to reduced minting fees

From checking liquity they use a check similar to yours: https://github.com/liquity/dev/blob/e38edf3dd67e5ca7e38b83bcf32d515f896a7d2f/packages/contracts/contracts/TroveManager.sol#L948-L962

sambP commented 3 months ago

@GalloDaSballo I can not follow you here. Would you please explain how it would be possible to arbitrage through redemptions in recovery mode?