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.
SAFEEnginestores 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.
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.
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).
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
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
debtCeilings. Apart from this, governance can remove control from the
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
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.