Submitted by Infect3d, also found by ZanyBonzy, ArmedGoose, 0xleadwizard, peanuts, Myrault, vahdrak1, jesjupyter, SBSecurity, miaowu, OMEN, ke1caM, Bauchibred, Abdessamed, 0xnilay, HChang26, Bigsam, iamandreiski, 0xAlix2, alix40, atoko, GalloDaSballo, T1MOH, and 0x486776
Right now there are no incentives to liquidate a position with a CR<1, as the liquidator will have to burn the full borrowed amount, and will get the full collateral.
But a CR<1 means collateral is worth less than borrowed amount. So this is a clear loss for the liquidator, meaning no one will liquidate the position.
If CR<1, position will not be liquidated, protocol possibly incurring worse bad debt than this could have been.
Refactor the liquidation calculation, to allow liquidator to repay the debt and still get a reward out of this.
Context
shafu0x (DYAD) disputed and commented:
Koolex (judge) decreased severity to Low and commented:
Infect3d (warden) commented:
shafu0x (DYAD) commented:
Infect3d (warden) commented:
Koolex (judge) increased severity to Medium and commented:
