Last updated
Last updated
Relevant smart contracts:
The Core Module stores all the SAFE data, allows external actors to trigger liquidations in case SAFEs are underwater and also handles debt and surplus auctions.
The SAFEEngine
stores all SAFEs' states and system coin balances, as well as the amount of collateral and debt each address has. This contract is self-contained and has no external dependencies.
The LiquidationEngine
is meant to check if a SAFE is unsafe (the value of the issued debt is too high compared to the collateral value) and start a collateral auction that sells a portion of the SAFE's collateral in order to cover a share of its debt.
The AccountingEngine
stores the overall system surplus and debt data. It is meant to settle deficit via debt auctions and dispose off surplus via surplus auctions or basic transfers.
SAFEEngine
- A bug in the SAFEEngine
could be fatal and would lead to collateral or debt being stuck in the system
LiquidationEngine
- A bug in the LiquidationEngine
could lead debt or collateral being assigned to addresses from where they cannot be recovered. Compared to MCD, the LiquidationEngine
can call external contracts that are meant to save SAFEs by adding more collateral in the system. These "insurance" contracts, if coded incorrectly, can change system state without actually adding any collateral and thus block the engine from starting new auctions. The liquidateSAFE(bytes32 collateralType, address cdp)
function also uses mutexes to prevent re-entrancy. If a mutex is not unassigned at the end of the call, it can prevent the LiquidationEngine
from liquidating a specific SAFE in the future.
AccountingEngine
- A bug in the AccountingEngine
would prevent the system from reaching equilibrium (by auctioning debt or disposing off surplus).
Both the SAFEEngine
and the LiquidationEngine
rely (directly or indirectly) on the OracleRelayer
which in turn receives price data from multiple trusted sources. If the price feed oracles fail, it's possible that SAFEs will be unfairly liquidated or that users will generate unbacked debt.
SAFEEngine
- Malicious governance can steal collateral (modifyCollateralBalance
) or mint unbacked debt for no apparent reason (createUnbackedDebt
/addition of worthless collateral types).
LiquidationEngine
- Governance could misconfigure liquidation parameters (e.g an extremely low or high liquidationPenalty
).
AccountingEngine
- Malicious governance can set null addresses as the debtAuctionHouse
or the surplusAuctionHouse
and thus not allow the system to reach equilibrium or even trigger settlement. The can also set a faulty AccountingEngine.systemStakingPool
which can prevent the engine from starting new debt auctions and thus leave deficit in the system
SAFEEngine
(Level 2 Gov Minimization) - the SAFEEngine
will need an external contract to automatically set the globalDebtCeiling
and each collateral's individual debtCeiling
s. Apart from this, governance can remove control from the SAFEEngine
.
LiquidationEngine
(Level 1 Gov Minimization) - the LiquidationEngine
may have an external contract authorized to periodically set onAuctionSystemCoinLimit
depending on the current outstanding amount of system coins generated. Governance will also need to have control over connecting and disconnecting saviour contracts because they are external dependencies connected to other protocols/3rd parties. Apart from these, governance can remove control over this contract.
AccountingEngine
(Level 2 Gov Minimization) - the AccountingEngine
must authorize an external contract to automatically set initialDebtAuctionMintedTokens
and debtAuctionBidSize
according to the protocol token and system coin market prices. Governance may also keep control over setting systemStakingPool
in case the staking pool still needs to be upgraded and may cause problems in the engine.
Handling SAFE state, liquidations and accounting (surplus & bad debt)