# Dust supply extreme utilization rate

Rate or utilization math that hits a bound when supply or borrow is tiny or miscomputed

_Area: DeFi accounting and math bugs. Seen in 2 disclosed reports; latest 2025-01-08. Updated 2026-10-25._

## How it works
Interest and fee math assumes the utilization ratio (borrows vs. supply) reflects real economic pressure. When supply is dust, or the denominator is the wrong quantity, a tiny position moves the ratio to its bound. The rate model then compounds that extreme rate against the whole book, so a 1-wei action produces outsized, persistent effects [E1](https://bugbountylibrary.com/r/cantina%3Amorpho_blue_dec2023%3A3.2.8.md)[E2](https://bugbountylibrary.com/r/sherlock%3A2025-01-peapods-finance%3AM-16.md).

## Where it shows up
- Interest accrual calls a stateful rate model unconditionally, with no minimum market size gate [E1](https://bugbountylibrary.com/r/cantina%3Amorpho_blue_dec2023%3A3.2.8.md)
- Utilization computed as borrows/(totalAssets - borrows) instead of borrows/totalAssets [E2](https://bugbountylibrary.com/r/sherlock%3A2025-01-peapods-finance%3AM-16.md)
- Permissionless accrual functions that anyone can call to compound a distorted rate [E2](https://bugbountylibrary.com/r/sherlock%3A2025-01-peapods-finance%3AM-16.md)
- Fee/rebate formulas keyed off a maker's open notional, where offsetting trades grow notional without adding liquidity [E3](https://bugbountylibrary.com/r/sherlock%3A2024-02-perpetual%3AM-10.md)
- Share/asset conversion at extreme ratios where rounding favors one side

## How to review
Check the invariant: utilization = totalBorrow / totalSupplyAssets, and the rate model is only meaningful when both are non-trivial. Verify:
- The denominator is total assets, not available liquidity [E2](https://bugbountylibrary.com/r/sherlock%3A2025-01-peapods-finance%3AM-16.md)
- Rate updates are gated on a minimum market size, or dust positions cannot reach the bound [E1](https://bugbountylibrary.com/r/cantina%3Amorpho_blue_dec2023%3A3.2.8.md)
- Accrual cannot be triggered permissionlessly to compound a distorted rate [E2](https://bugbountylibrary.com/r/sherlock%3A2025-01-peapods-finance%3AM-16.md)
- Notional growth that drives fees corresponds to real liquidity provided, not offsetting positions [E3](https://bugbountylibrary.com/r/sherlock%3A2024-02-perpetual%3AM-10.md)
- Rounding at extreme share ratios does not let one side extract value

## Variants seen
- Dust supply/borrow drives utilization to 100%, IRM inflates rates exponentially [E1](https://bugbountylibrary.com/r/cantina%3Amorpho_blue_dec2023%3A3.2.8.md)
- Wrong denominator (available vs. total) overstates utilization near full borrow [E2](https://bugbountylibrary.com/r/sherlock%3A2025-01-peapods-finance%3AM-16.md)
- Offsetting maker trades inflate utilization ratio and borrow fees for free [E3](https://bugbountylibrary.com/r/sherlock%3A2024-02-perpetual%3AM-10.md)

## Impact and severity
Led to un-clearable bad debt and share-inflation losses [E1](https://bugbountylibrary.com/r/cantina%3Amorpho_blue_dec2023%3A3.2.8.md), borrower interest inflated >10%/day [E2](https://bugbountylibrary.com/r/sherlock%3A2025-01-peapods-finance%3AM-16.md), and arbitrary borrow-fee increases [E3](https://bugbountylibrary.com/r/sherlock%3A2024-02-perpetual%3AM-10.md). Severity rises when the distorted rate compounds against the whole book and when accrual is permissionless, making the effect repeatable and hard to unwind.

## Evidence
- E1: https://bugbountylibrary.com/r/cantina%3Amorpho_blue_dec2023%3A3.2.8.md
- E2: https://bugbountylibrary.com/r/sherlock%3A2025-01-peapods-finance%3AM-16.md
- E3: https://bugbountylibrary.com/r/sherlock%3A2024-02-perpetual%3AM-10.md