Kinetic Disclosed Report

https://github.com/kinetic-market/public-money-market-contracts

Description

The protocol does not impose any restrictions on the amount of tokens that can be minted or borrowed. This lack of limits creates a problem when dealing with small borrow positions, as liquidators have no incentive to liquidate them. The liquidation profit from small positions may be insufficient to cover the gas fees associated with the liquidation process, rendering such positions unprofitable to liquidate. Consequently, these small positions may remain outstanding, effectively leaving bad debt on the protocol’s balance sheet.

Recommendations

Implement a minimum loan size requirement for borrowing or minting tokens. This would ensure that small positions, which would otherwise not be worth liquidating, are not created in the first place.

https://github.com/kinetic-market/public-money-market-contracts/blob/d46f5223344ff6502349549ad858588e496483df/contracts/CToken.sol#L720