// VULNERABLE: Cached health factor
mapping(address => uint256) public healthFactors;
 
function liquidate(address user) external {
    // Uses stale cached value
    require(healthFactors[user] < 1e18);
    // Actual health factor may be different!
}
 
// SECURE: Compute in real-time
function liquidate(address user) external {
    uint256 collateralValue = getCollateralValue(user);  // Real-time oracle
    uint256 debtValue = getDebtValue(user);
    uint256 healthFactor = collateralValue * 1e18 / debtValue;
    require(healthFactor < 1e18);
}

// VULNERABLE: Bonus exceeds safety margin
uint256 constant MAX_LTV = 80e16;           // 80%
uint256 constant LIQUIDATION_BONUS = 15e16; // 15%
 
// Attacker borrows at 80% LTV, self-liquidates with 15% bonus
// Net profit: 15% - (100% - 80%) = -5%... wait, this is a loss
// But if bonus > (100% - LTV), it's profitable!
 
uint256 constant LIQUIDATION_BONUS = 25e16; // 25% (DANGEROUS!)
// Profit: 25% - 20% = 5% free money

// VULNERABLE: Interest rounds to 0
uint256 interest = principal * rate / SECONDS_PER_YEAR;
// If principal * rate < SECONDS_PER_YEAR, interest = 0
 
// Example: principal = 100 wei, rate = 1e16 (1%)
// interest = 100 * 1e16 / 31536000 = 0 (rounds down)
 
// SECURE: Use high-precision accumulator
uint256 interestAccumulator; // Ray (1e27) precision
uint256 newAccumulator = oldAccumulator + (rate * 1e27 / SECONDS_PER_YEAR);

// VULNERABLE: Single oracle, no staleness check
function getCollateralValue(address user) public view returns (uint256) {
    uint256 price = oracle.getPrice(collateralToken);  // Could be stale!
    return userBalance * price / 1e18;
}
 
// SECURE: Validate oracle freshness
function getCollateralValue(address user) public view returns (uint256) {
    (uint256 price, uint256 timestamp) = oracle.getPriceWithTimestamp(collateralToken);
    require(block.timestamp - timestamp <= MAX_STALENESS);
    return userBalance * price / 1e18;
}

// VULNERABLE: No bad debt handling
function liquidate(address user) external {
    uint256 collateralValue = getCollateralValue(user);
    uint256 debtValue = getDebtValue(user);
    
    // If collateral < debt, bad debt remains!
    // Suppliers lose money
}
 
// SECURE: Handle underwater positions
function liquidate(address user) external {
    uint256 collateralValue = getCollateralValue(user);
    uint256 debtValue = getDebtValue(user);
    
    if (collateralValue < debtValue) {
        uint256 badDebt = debtValue - collateralValue;
        // Socialize or use insurance fund
        insuranceFund -= min(badDebt, insuranceFund);
    }
}

// DANGEROUS: Liquidator bonus too high
uint256 constant LIQUIDATION_BONUS = 15e16; // 15%
 
function liquidate(address user, uint256 repayAmount) external {
    // Attacker can:
    // 1. Borrow at 80% LTV
    // 2. Wait for tiny price drop
    // 3. Self-liquidate with 15% bonus
    // = Free 15% - (100% - 80%) = Net profit!
}

// When one liquidation triggers another
// Large position liquidated → price drops → more liquidations
 
// Mitigations:
// - Gradual liquidation (partial)
// - Circuit breakers
// - Liquidation delays

// DANGEROUS: No bad debt handling
function liquidate(address user) external {
    // If collateral < debt after liquidation
    // Bad debt remains in protocol
    // Eventually becomes insolvent
}
 
// SECURE: Handle underwater positions
function liquidate(address user) external {
    uint256 collateralValue = getCollateralValue(user);
    uint256 debtValue = getDebtValue(user);
 
    if (collateralValue < debtValue) {
        // Socialize bad debt or use insurance fund
        uint256 badDebt = debtValue - collateralValue;
        insuranceFund -= min(badDebt, insuranceFund);
    }
}

contract JumpRateModel {
    uint256 public baseRate;      // Rate at 0% utilization
    uint256 public multiplier;    // Rate increase per utilization
    uint256 public jumpMultiplier; // Rate increase above kink
    uint256 public kink;          // Utilization % where jump occurs
 
    function getBorrowRate(uint256 cash, uint256 borrows)
        public view returns (uint256)
    {
        uint256 utilization = borrows * 1e18 / (cash + borrows);
 
        if (utilization <= kink) {
            return baseRate + utilization * multiplier / 1e18;
        } else {
            uint256 normalRate = baseRate + kink * multiplier / 1e18;
            uint256 excessUtil = utilization - kink;
            return normalRate + excessUtil * jumpMultiplier / 1e18;
        }
    }
}

// Attacker can manipulate utilization
// 1. Flash loan large amount
// 2. Deposit → lower utilization → lower rates
// 3. Borrow at low rate
// 4. Withdraw and repay flash loan

// DANGEROUS: Interest rounds to 0 for small amounts
uint256 interest = principal * rate / SECONDS_PER_YEAR;
// If principal * rate < SECONDS_PER_YEAR, interest = 0
 
// SOLUTION: Accumulate interest with high precision
uint256 interestAccumulator; // Ray (1e27) precision

// DANGEROUS: Instant collateral factor reduction
function setCollateralFactor(address token, uint256 newFactor) external {
    collateralFactors[token] = newFactor;
    // Existing borrowers may become instantly liquidatable!
}
 
// SECURE: Grace period or gradual reduction
function setCollateralFactor(address token, uint256 newFactor) external {
    require(newFactor >= collateralFactors[token] - MAX_DECREASE);
    pendingFactors[token] = newFactor;
    factorEffectiveTime[token] = block.timestamp + TIMELOCK;
}

// Collateral valued using manipulable oracle
// Attacker inflates collateral value → borrows more → profits
// See oracle vulnerability patterns

// Collateral that can't be liquidated:
// - Pausable tokens
// - Blacklistable tokens
// - Low liquidity tokens
 
// Mitigation: Whitelist collateral carefully

// VULNERABLE: Cap checked only on new borrows
function borrow(uint256 amount) external {
    require(totalBorrowed + amount <= borrowCap);
    // Interest accrual can push over cap!
}
 
// Check on any state-changing operation

// EXPLOIT: Borrow and repay in same block
// No interest accrued = free leverage
 
function borrow(uint256 amount) external {
    require(lastBorrowBlock[msg.sender] < block.number);
    lastBorrowBlock[msg.sender] = block.number;
    // ...
}

Health Factor = (Collateral Value × LTV) / Debt Value
 
Health Factor > 1: Safe
Health Factor < 1: Liquidatable

// DANGEROUS: Cached health factor
mapping(address => uint256) public healthFactors;
 
// Health factors become stale as prices change
// Always compute in real-time

// SECURE: Round health factor DOWN (safer)
uint256 healthFactor = collateralValue * 1e18 / debtValue;
 
// Round debt UP when calculating
uint256 debt = (borrowed * (1e18 + interest) + 1e18 - 1) / 1e18;

// Protocol takes cut of interest
uint256 interestToProtocol = interest * reserveFactor / 1e18;
uint256 interestToSuppliers = interest - interestToProtocol;

// Track earnings per token
// supplyIndex increases as interest accrues
uint256 newIndex = oldIndex + (interest * 1e18 / totalSupply);
 
// User earnings = balance * (currentIndex - userIndex) / 1e18