Continuous Borrowing Without Debt Reduction in borrow Function

[c4-submissions]

Lines of code

https://github.com/code-423n4/2023-10-wildcat/blob/main/src/market/WildcatMarket.sol#L124

Vulnerability details

Impact

The code for the borrow function allows borrowers to repeatedly withdraw funds from the market without reducing their borrowable amount. This oversight can have several significant impacts:

Excessive Debt Accumulation: Borrowers can accumulate debt without any requirement to reduce it, potentially exceeding the collateral obligations set by the protocol.

Increased Risk: This behavior exposes lenders and the protocol to greater risk, as borrowers can accumulate larger debts that may become difficult to repay.

Market Instability: Continuous borrowing without debt reduction can lead to market instability and potential disruptions in the protocol's functioning.

Proof of Concept

function borrow(uint256 amount) external onlyBorrower nonReentrant {
MarketState memory state = _getUpdatedState();
if (state.isClosed) {
  revert BorrowFromClosedMarket();
}
uint256 borrowable = state.borrowableAssets(totalAssets());
if (amount > borrowable) {
  revert BorrowAmountTooHigh();
}
_writeState(state);
asset.safeTransfer(msg.sender, amount);
emit Borrow(amount);
}

The borrow function permits borrowers to withdraw a specified amount from the market.

There is no mechanism in place to enforce repayments or reduce the borrowing capacity of the borrower after each withdrawal as borrowable is always the same amount.

As a result, the borrower can repeatedly call the borrow function to withdraw additional funds without any reduction in their borrowing limit

Tools Used

manual review

Recommended Mitigation Steps

Implement a dynamic calculation for the borrowable amount that takes into account the borrower's outstanding debt and collateral obligations. This ensures that the borrowable amount decreases as debt accumulates.

Assessed type

Access Control

[c4-pre-sort]

minhquanym marked the issue as low quality report

[minhquanym]

AI generated

[c4-judge]

MarioPoneder marked the issue as unsatisfactory: Insufficient quality