The kick penalty affects taking, increasing BPF and quote/collateral tokens require for a take
Summary
The kick penalty, besides penalizing borrowers, also affects taking: BPF may be increased; the amount of quote/collateral tokens required to repay the debt may be increased.
Vulnerability Detail
As per the whitepaper:
The moment that a loan goes into liquidation its debt is increased by 90 days of interest, based on the current interest rate. This is done to disincentivize borrowers from repaying their loans only after it has been liquidated.
However, the penalty also increases the total borrower's debt to be repaid, which affects taking in multiple way:
When TP < NP, the BPF may be higher than expected because the kick penalty increases TP: the higher the debt, the higher the TP. A higher BPF increases the bond reward and may turn it from a negative one to a positive one.
A higher debt will require more quote/collateral tokens to repay the debt (Auctions.sol#L1143-L1155).
Impact
Taking is affected in the following ways:
BPF increases, which increases the bond reward for kickers.
Consider storing the kick penalty in the IPoolState.Borrower structure as a separate value and add it to borrower's debt only when borrower repays a debt after a liquidation has started.
Jeiwan
medium
The kick penalty affects taking, increasing BPF and quote/collateral tokens require for a take
Summary
The kick penalty, besides penalizing borrowers, also affects taking: BPF may be increased; the amount of quote/collateral tokens required to repay the debt may be increased.
Vulnerability Detail
As per the whitepaper:
However, the penalty also increases the total borrower's debt to be repaid, which affects taking in multiple way:
Impact
Taking is affected in the following ways:
Code Snippet
Auctions.sol#L810-L811 Auctions.sol#L832 Auctions.sol#L1487 Auctions.sol#L1429 Auctions.sol#L1143-L1155
Tool used
Manual Review
Recommendation
Consider storing the kick penalty in the
IPoolState.Borrower
structure as a separate value and add it to borrower's debt only when borrower repays a debt after a liquidation has started.