No health checks performed on liquidations
Description
A liquidation is expected to be performed when the user's position is below the maintenance margin. However, there are currently no checks in the Ledger contract on whether the user's position is below the maintenance margin. This means that anyone could theoretically liquidate any position at any time, regardless of whether the position is below the maintenance margin or not.
function executeLiquidation(EventTypes.Liquidation calldata liquidation, uint64 eventId)
external
override
onlyOperatorManager
{
AccountTypes.Account storage liquidatedAccount = userLedger[liquidation.liquidatedAccountId];
if (liquidation.insuranceTransferAmount != 0) {
_transferLiquidatedAssetToInsurance(
liquidatedAccount,
liquidation.liquidatedAssetHash,
liquidation.insuranceTransferAmount,
liquidation.insuranceAccountId
);
}
uint256 length = liquidation.liquidationTransfers.length;
for (uint256 i = 0; i < length; i++) {
EventTypes.LiquidationTransfer calldata liquidationTransfer = liquidation.liquidationTransfers[i];
_liquidatorLiquidateAndUpdateEventId(
liquidationTransfer, eventId, liquidationTransfer.liquidatorAccountId != liquidation.insuranceAccountId
);
_liquidatedAccountLiquidate(liquidatedAccount, liquidationTransfer);
_insuranceLiquidateAndUpdateEventId(liquidation.insuranceAccountId, liquidationTransfer, eventId);
}
liquidatedAccount.lastCefiEventId = eventId;
emit LiquidationResult(
_newGlobalEventId(),
liquidation.liquidatedAccountId,
liquidation.insuranceAccountId,
liquidation.liquidatedAssetHash,
liquidation.insuranceTransferAmount,
eventId
);
}Impact
Anyone can liquidate any position at any time, even if the position is not below the maintenance margin. The low likelihood of this issue is due to the facts that the liquidation process is performed off chain and the liquidation process is not public. In the off-chain components, the team has stated that they are performing necessary checks on the liquidation process.
Recommendations
We recommend adding the necessary checks on chain to ensure that the user's position is below the maintenance margin before liquidating their position.
Remediation
The team has acknowledged this issue and have stated that they are performing necessary checks on the liquidation process off chain.