Collateral Ratio Manipulation

Collateral ratio manipulation involves altering the perceived value of assets used as collateral to borrow against in a lending protocol. By manipulating the oracle price of the collateral, an attacker can artificially inflate their borrowing power, allowing them to withdraw more funds than they are entitled to.

Conversely, they might force the liquidation of other users' positions by crashing the oracle price of their collateral. This attack exploits the dependency of lending protocols on external price feeds to determine the health of loans.

It is a direct attack on the solvency mechanisms of decentralized lending markets. Maintaining accurate and robust collateral valuation is vital for protocol stability.