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    Usage of illiquid tokens as Collateral

    AGAVE: Deployment Security Audit

    Severity
    Informational
    Status
    Open
    Location(s)

    The

    usage

    of

    FOX

    could

    lead

    to

    this

    serious

    issue

    if

    enabled

    as

    collateral

    Description

    The usage of illiquid tokens as collateral in the protocol can lead to serious protocol manipulation. We have seen this with various lending protocols, whereby manipulating the price of a collateral asset (mostly performed via Flashloans) can lead to over-emitting of aTokens and potentially drain funds in the protocol

    Recommendation

    Preform serious and detailed due diligence when adding new tokens into the protocol, and especially when enabling as collateral.

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    Usage of illiquid tokens as Collateral

    AGAVE: Deployment Security Audit

    Severity
    Informational
    Status
    Open