Protocol has both underlying  and market tokens. Lenders deposit underlying tokens and get market tokens, which earn interest. When they want to withdraw their assets, they will burn their market tokens and get the underlying tokens back with some interest. All of the internal accounting is made with these market tokens and they are tracked as scaled balances. Market tokens are minted and burned and these actions affect scaledTotalSupply.
Market tokens can also be transferred between accounts like a regular ERC20 token. See https://github.com/code-423n4/2024-08-wildcat/blob/fe746cc0fbedc4447a981a50e6ba4c95f98b9fe1/src/market/WildcatMarketToken.sol#L41-L90
Issue however is that transfers are allowed to the 0 address, which then means that the total supply should be reduced, since the tokens are burnt, issue however is that this is never done, causing for the total supply to be out of sync.
Note that per WildcatMarketBase we can make the conclusion that  internal and external balance tracking will be out of sync because of allowing transfer to zero addresses. That is by checking some functions that use total supply while calculating important parameters will now return wrong values. For e.g applyProtocolFee(), liquidityRequired(), and totalDebts().
Internal and external trackers to be out of sync, since this easily causes accounting issues. Parameters that uses scaledTotalSupply (protocol fee, required liquidity etc) will be greater than the actual amount.
Either reduce tokens that gets sent to 0x0 by burning them or not allowing transfers to the 0x0 address.
