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Huge Tiger Pike

Medium

Inability to edit floor price of liquidation auction

Summary

We know that a Dutch auction for a defaulted loan has a floor price ranging between 5% and 30%

In situations where the Dutch liquidation floor price remains unattractive to buyers, such as in the case of a long-duration loan where the collateral value has significantly decreased, it is essential to have a mechanism to maximize the value recovered from the collateral. We want to avoid scenarios where buyers are unwilling to pay 30% of the collateral value, but would be interested at 29%. Utilizing the existing editFloorPrice() function would be beneficial in this context. Lenders would prefer to receive 29% of the collateral's value rather than nothing at all.

Root Cause

editFloorPrice() is not used in DebitaV3Loan

Internal pre-conditions

No response

External pre-conditions

No response

Vulnerability Path

  1. A liquidation auction starts.
  2. No buyers express interest.
  3. There is no mechanism to edit the floor price.

Impact

Lenders could possibly incur substantial losses.

PoC

No response

Mitigation

Add editFloorPrice functionality in DebitaLoanV3.sol, which could be called by any lender or borrower that participates in the loan.