Aurigami
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Aurigami

PSA: Critical Issue in Aurora Money Markets

⚠️ TL;DR We have found a critical issue that could affect money markets on Aurora — some users could NEVER be liquidated, due to a gas limit issue for Aurora.

The Gas Issue

Aurora runs on top of NEAR, and what this means is that the EVM transactions on Aurora are all ultimately converted into NEAR transactions.

But here’s the problem — gas costs are computed very differently between EVM and NEAR. This means:

  • A transaction could fit within the gas limit on Aurora, but still exceed NEAR’s gas limit, leading to failure
  • A transaction that is seemingly cheap on Aurora could still fail on NEAR. In our testing, some transactions that cost only 450k in EVM would fail on NEAR

In short, certain transactions on Aurora would fail unexpectedly as they exceed the gas limit on NEAR. This exact issue has already been covered by Aurora in their documentation here.

The Liquidation Issue

Here’s the real kicker.

For overcollateralized money markets such as Compound, positions that fall below a certain Loan-To-Value (LTV) threshold must be liquidated to ensure that the borrowed amount can and is paid back (with additional interest). This automated-feature is key to the functioning of DeFi money markets.

However, due to the gas limit issue on Aurora, we have discovered that certain user actions could cause liquidation transactions to run out of gas and as a result, fail. More specifically for a Compound fork, a user could enter around 4 markets and any transaction to liquidate them would fail. This has dire implications for the money market:

  • A borrower could run-away with the loans without paying back any principal or interests, even when the loan amount has exceeded the collateral value
  • As such, less funds are available for withdrawal for lenders, which might lead to a bank run and further loss of funds

What to do as a money market?

Keep an eye out for future upgrades on NEAR and Aurora that will alleviate the gas issue! And while you wait, limit the maximum number of markets a user can enter to ensure that liquidation transactions could go through when they are needed. If possible, optimize your contracts for lower gas consumption on NEAR.

At Aurigami, we are currently working closely with the Aurora team to tackle these issues, and will share more on our progress along the way.

Attention to all protocols on Aurora — this could affect you too!

We found that some money markets that already live on Aurora suffer from the aforementioned issues, and have alerted the teams prior to this announcement.

As for other protocols within the Aurora ecosystem, this could affect you too! The same logic applies so be on the lookout for critical transactions that would never go through as a result of the gas issue.

We all share the collective goal of nurturing the growth of the entire NEAR and Aurora ecosystem, which includes staying on our toes, constantly reiterating for improvements.

As mentioned, the Aurora and NEAR team are already hard at work to roll out the fix they have identified, which can happen anytime soon!

That’s it from us for now, more updates will be shared whenever available.

WAGMI.

Website: https://aurigami.finance/

Twitter: https://twitter.com/aurigami_PLY

Discord: https://discord.com/invite/MpgHRtm8EK

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