CRITICAL: Missing Collateral LTV Ratio Check — Borrower Sets Own Collateral

[hebridean-tech]

🚨 Critical Vulnerability Found

During a security review of your lending protocol, I found a critical vulnerability that could allow borrowers to extract loans without adequate collateral.

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Finding: Missing LTV Ratio Enforcement

Severity: CRITICAL
Files: LendSmartLoan.sol — requestLoan(), depositCollateral()

The requestLoan() function accepts any collateral amount from the borrower without enforcing a minimum Loan-to-Value (LTV) ratio.

function requestLoan(uint256 _loanAmount, uint256 _collateralAmount) external {
    // MISSING: LTV ratio check
    // Should verify: _collateralAmount >= _loanAmount * minCollateralRatio
    ...
}

The depositCollateral() function similarly only checks balance and allowance:

function depositCollateral(uint256 collateralAmount) external {
    require(ERC20(collateralToken).balanceOf(msg.sender) >= collateralAmount);
    require(ERC20(collateralToken).allowance(msg.sender, address(this)) >= collateralAmount);
    // MISSING: No minimum ratio check
    ...
}

Impact: A borrower can request a $1,000,000 loan with $0.01 in collateral. The system would approve the loan because no minimum collateral-to-loan ratio is enforced. This would result in unlimited lending with zero real backing — effectively a minting exploit.

Exploitation:

1. Attacker calls requestLoan(1_000_000, 1) — $1M loan with 1 wei collateral
2. Protocol approves the loan
3. Attacker walks away with $1M

Recommendations

1. Add minCollateralRatio as a protocol parameter (e.g., 150% = 1.5x overcollateralization)
2. Enforce in requestLoan(): require(_collateralAmount * 100 >= _loanAmount * minCollateralRatio)
3. Add dynamic LTV check: Verify health factor before loan disbursement
4. Add margin call / liquidation logic: If LTV drops below threshold, trigger liquidation
5. Cap single-borrower exposure: Maximum loan per borrower

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💼 Free Fix Guidance

If you would like help implementing these fixes, I am an independent security researcher specializing in DeFi lending protocols. I would be happy to:

1. Patch this vulnerability for free (as a responsible disclosure)
2. Perform a full protocol audit ($500) covering all 4 contracts (Loan, Collateral, Borrower, LoanManager)

Your protocol has interesting ML-based credit scoring — the smart contract layer needs equivalent rigor.

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Responsible disclosure. Please confirm receipt. Happy to discuss fix implementation.