As specified on the whitepaper, Unitas conducts Stability Burn if the protocol hasn’t reached its minimum over-reservation ratio.
The problem here is that usd1 will be paused when reserve ratio <=130% and the pausable method of the usd1 is shared between the minting and burning function. Therefore any burning that happens for the stability burns, will not be able to be conducted when the protocol needs it more making the reserve ratio go lower.
Impact
Unable to perform stability burns and revenue distribution
stopthecap
high
Pausing
usd1minting at <=130% reserve ratio will disable any Stability Burn and revenue distribution from the insurance stakingSummary
Pausing usd1 minting at <=130% reserve ratio will disable any Stability Burn and revenue distribution from the insurance staking
Vulnerability Detail
According to the docs, if the Reserve ratio ≤ 130%, the minting of
usd1will be paused.https://github.com/sherlock-audit/2023-04-unitasprotocol-0xffff11/tree/main/Unitas-Protocol#reserve-ratio--130
As specified on the whitepaper, Unitas conducts
Stability Burnif the protocol hasn’t reached its minimum over-reservation ratio. The problem here is thatusd1will be paused when reserve ratio <=130% and the pausable method of theusd1is shared between the minting and burning function. Therefore any burning that happens for the stability burns, will not be able to be conducted when the protocol needs it more making the reserve ratio go lower.Impact
Unable to perform stability burns and revenue distribution
Code Snippet
https://github.com/sherlock-audit/2023-04-unitasprotocol-0xffff11/tree/main/Unitas-Protocol#reserve-ratio--130 https://github.com/sherlock-audit/2023-04-unitasprotocol/blob/main/Unitas-Protocol/src/ERC20Token.sol#L171-L184
Tool used
Manual Review
Recommendation
Do not tie pausable to both minting and burning at the same time