# Interest rates can be raised above the market as a griefing, disabling the pool

Ajna's interest-rate EMA uses total collateral, so a large collateral holder borrowing a tiny amount depresses TAU and inflates rates, disabling the pool.

- Payout: Contest reward
- Severity: medium
- Program: Ajna
- Credited: hyh
- Disclosed: 2022-12-21
- Write-up quality: 7/10
- Original: https://github.com/sherlock-audit/2023-01-ajna-judging/issues/100
- Library page: https://bugbountylibrary.com/r/sherlock%3A2023-01-ajna%3AM-14
- Tags: domain:web3 impact:dos kind:contest platform:sherlock sev:medium tech:evm tech:solidity technique:source-review vuln:business-logic vuln:governance vuln:oracle-manipulation

**Target:** Lending pool interest-rate algorithm (PoolCommons.updateInterestRate)
**Root cause:** Target utilization TAU = debtEma/lupColEma uses total pledged collateral, so a borrower with huge collateral and negligible debt depresses the ratio and pushes rates up regardless of real utilization.
**Steps:**
1. Identify a quote-collateral pool (e.g. USDC-WBTC) with low market rates.
2. As a large WBTC holder, call `drawDebt` borrowing minimal debt (e.g. `1000 USDC`) while pledging excessive collateral (e.g. `1000 WBTC`).
3. Pool collateral rises; `lupColEma` EMA moves toward the large collateral value while `debtEma` stays ~constant.
4. After 12h, `updateInterestRate` computes low `tu`, triggering `INCREASE_COEFFICIENT` repeatedly, raising rates above market.
5. Borrowers leave; lenders see low utilization and exit; keep a small collateral position to sustain elevated rates.
**How found:** Code review of the interest-rate EMA: noticed TAU uses total collateral rather than debt-weighted collateralization, and that collateral is freely pledgeable via drawDebt, enabling ratio manipulation with negligible debt.
**Exploitation:** Attacker pledges magnitudes-excessive collateral against a tiny loan, holding it to keep the 3.5d EMA of Debt/(LUP*Collateral) depressed, forcing interest rates above market and rendering the pool unusable; cost is only forgone risk-free yield on collateral.
**Escalation:** Sustained elevated rates drive out borrowers and lenders, effectively killing the only pool for that quote-collateral pair.
**Insight:** When an EMA/ratio averages per-user values, check whether a user can contribute a large denominator term with near-zero numerator (or vice versa) to skew the average cheaply; debt-weight the metric to price manipulation.