Submitted by falconhoof, also found by grearlake
No minLoanSize can destabilise the protocol.
According to protocol team, they plan to roll out the protocol with minLoanSize = 0 and adjust that number if needs be. This can be a big issue because there will be no incentive for liquidators to liquidate small underwater positions given the gas cost. To do so would not make economic sense based on the incentive they would receive.
It also opens up a cheap attack path for would be attackers where they can borrow many small loans, which will go underwater as they accrue interest, but will not be liquidated.
Can push the entire protocol into an underwater state. Underwater debt would first be covered by Protocol reserves and where they arent sufficient, lenders will bear the responsibility of the uneconomical clean up of bad debt, so both the protocol and lenders stand to lose out.
Close the vulnerability by implementing a realistic minLoanSize, which will incentivise liquidators to clean up bad debt.
kalinbas (Revert) acknowledged and commented:
ronnyx2017 (judge) commented:
