Failure of flashloan repayment

[parth-15]

In the implementation of ParaSwapLiquiditySwapAdapter, ParaSwapRepayAdapter and ParaSwapDebtSwapAdapter(ParaSwapDebtSwapAdapter written by bgd-labs while other two written by AAVE team), flashloan with mode 0 can be taken if there is need of extra collateral asset. If flashloan with mode 0 is taken, it needs to be paid in full.

There can be issue when flashloan is taken with mode 0 as follows(it shows the issue in ParaSwapLiquiditySwapAdapter but same can happen in above mentioned adapters):

• Flashloan is taken by adapter. Received amount is supplied as collateral on behalf of user.
• User receives corresponding aTokens for flashloaned asset.
• The collateral is swapped using paraswap adapters and new collateral is supplied which updates the index.
• During repayment of flashloan, the aTokens for flashloaned asset may not correspond to exact flashloan amount due to rounding issue. This results in failure of transaction.

[parth-15]

Testcase highlighting this behaviour in ParaSwapLiquiditySwapAdapter:

function test_liquiditySwap_with_extra_collateral() public {
    uint256 supplyAmount = 12000e18;
    uint256 borrowAmount = 5000e18;
    uint256 flashLoanAmount = 367242556761;
    address collateralAssetAToken = AaveV2EthereumAssets.DAI_A_TOKEN;
    address collateralAsset = AaveV2EthereumAssets.DAI_UNDERLYING;
    address newCollateralAsset = AaveV2EthereumAssets.LUSD_UNDERLYING;
    address newCollateralAssetAToken = AaveV2EthereumAssets.LUSD_A_TOKEN;
    address flashLoanAsset = AaveV2EthereumAssets.USDC_UNDERLYING;
    address flashLoanAssetAToken = AaveV2EthereumAssets.USDC_A_TOKEN;
    uint256 flashLoanAmount = bound(flashLoanAmount1, 2000e6, 1000_000e6);
    vm.startPrank(user);

    _supply(AaveV2Ethereum.POOL, supplyAmount, collateralAsset);
    _borrow(AaveV2Ethereum.POOL, borrowAmount, collateralAsset);

    uint256 collateralAssetATokenBalanceBefore = IERC20Detailed(collateralAssetAToken).balanceOf(
      user
    );

    // Swap liquidity(collateral)
    uint256 collateralAmountToSwap = 2000e18;
    PsPResponse memory psp = _fetchPSPRoute(
      collateralAsset,
      newCollateralAsset,
      collateralAmountToSwap,
      user,
      true,
      false
    );

    IERC20Detailed(collateralAssetAToken).approve(
      address(liquiditySwapAdapter),
      collateralAmountToSwap
    );

    IERC20Detailed(flashLoanAssetAToken).approve(address(liquiditySwapAdapter), flashLoanAmount);


    IParaSwapLiquiditySwapAdapter.LiquiditySwapParams
      memory liquiditySwapParams = IParaSwapLiquiditySwapAdapter.LiquiditySwapParams({
        collateralAsset: collateralAsset,
        collateralAmountToSwap: collateralAmountToSwap,
        newCollateralAsset: newCollateralAsset,
        minNewCollateralAmount: 2000e18,
        offset: psp.offset,
        paraswapData: abi.encode(psp.swapCalldata, psp.augustus)
      });

    IParaSwapLiquiditySwapAdapter.PermitInput memory collateralATokenPermit;
    IParaSwapLiquiditySwapAdapter.PermitInput memory flashLoanATokenPermit;
    IParaSwapLiquiditySwapAdapter.FlashParams memory flashParams = IParaSwapLiquiditySwapAdapter.FlashParams({
      pool: address(AaveV3Ethereum.POOL),
      flashLoanAsset: flashLoanAsset,
      flashLoanAmount: flashLoanAmount,
      user: user,
      flashLoanAssetPermit: collateralATokenPermit
    });

    liquiditySwapAdapter.swapLiquidity(liquiditySwapParams, flashParams, collateralATokenPermit);
    {
    uint256 collateralAssetATokenBalanceAfter = IERC20Detailed(collateralAssetAToken).balanceOf(
      user
    );
    assertTrue(
      _withinRange(
        collateralAssetATokenBalanceBefore - collateralAssetATokenBalanceAfter,
        collateralAmountToSwap,
        2
      )
    );
    }
    _invariant(address(liquiditySwapAdapter), collateralAsset, newCollateralAsset);
    _invariant(address(liquiditySwapAdapter), collateralAssetAToken, newCollateralAssetAToken);
    _invariant(address(liquiditySwapAdapter), flashLoanAsset, flashLoanAssetAToken);
  }

The above test fails due to substraction overflow because user's aToken is not equal to flashLoanAmount.

[parth-15]

Potential solution:

• Not to fix and keep it as it is because it is very less likely to occur.
• Change the logic of flashloan to always take debt bearing flashloan.