Markets with equities as indexes can cause unexpected behavior and economic damage

Summary

Markets which use equities as indexes can experience a lot of unexpected behavior in the case of a stock split, reverse stock split, company merger, etc.

Vulnerability Detail

Markets rely on specific Chainlink price feeds as a market index prices, which dictate whether longs or shorts should be paid rewarded. A shift in the price of such an index is supposed to reward one side and take from the other.

The issue arises because PYTH equity price feeds can be used as price feeds for a market. Equities unlike any other type of feed can change under extraordinary circumstances such as stock splits, reverse stock splits, company mergers and other similar situations.

https://www.cnbc.com/2022/02/01/google-parent-alphabet-announces-20-for-1-stock-split.html

https://finance.yahoo.com/news/wwe-and-ufc-owner-endeavor-agree-to-massive-merger-110951505.html

Impact

A market using an equity that experiences such an event will be greatly damaged as the price will suddenly drop thus liquidating all the people who are longing and paying out big amounts to all of the people shorting.

Code Snippet

https://github.com/sherlock-audit/2023-07-perennial/blob/main/perennial-v2/packages/perennial-extensions/contracts/MultiInvoker.sol

https://github.com/sherlock-audit/2023-07-perennial/blob/main/perennial-v2/packages/perennial/contracts/Market.sol

Tool used

Manual Review

Recommendation

Consider implementing some sort of mechanism, that will allow for the emergency termination of a market's operation, that keep the users' funds safe during such an event.

sherlock-audit / 2023-07-perennial-judging

OxZ00mer - Markets with equities as indexes can cause unexpected behavior and economic damage #50