[WP-M17] USDMPegRecovery.sol#withdraw() withdraw may often fail

[code423n4]

Lines of code

https://github.com/code-423n4/2022-02-concur/blob/72b5216bfeaa7c52983060ebfc56e72e0aa8e3b0/contracts/USDMPegRecovery.sol#L110-L128

Vulnerability details

Per the doc:

USDM deposits are locked based on the KPI’s from carrot.eth.

3Crv deposits are not locked.

https://github.com/code-423n4/2022-02-concur/blob/72b5216bfeaa7c52983060ebfc56e72e0aa8e3b0/contracts/USDMPegRecovery.sol#L110-L128

function withdraw(Liquidity calldata _withdrawal) external {
        Liquidity memory total = totalLiquidity;
        Liquidity memory user = userLiquidity[msg.sender];
        if(_withdrawal.usdm > 0) {
            require(unlockable, "!unlock usdm");
            usdm.safeTransfer(msg.sender, uint256(_withdrawal.usdm));
            total.usdm -= _withdrawal.usdm;
            user.usdm -= _withdrawal.usdm;
        }

        if(_withdrawal.pool3 > 0) {
            pool3.safeTransfer(msg.sender, uint256(_withdrawal.pool3));
            total.pool3 -= _withdrawal.pool3;
            user.pool3 -= _withdrawal.pool3;
        }
        totalLiquidity = total;
        userLiquidity[msg.sender] = user;
        emit Withdraw(msg.sender, _withdrawal);
    }

However, because the withdraw() function takes funds from the balance of the contract, once the majority of the funds are added to the curve pool via provide(). The withdraw() may often fail due to insufficient funds in the balance.

PoC

1. Alice deposits 4M USDM and 4M pool3 tokens;
2. Guardian calls provide() and all the usdm and pool3 to usdm3crv;
3. Alice calls withdraw(), the tx will fail, due to insufficient balance.

Recommendation

Consider calling usdm3crv.remove_liquidity_one_coin() when the balance is insufficient for the user's withdrawal.

[GalloDaSballo]

The warden has identified a specific scenario in which user funds would not be withdrawable

Because the code uses internal storage for accounting rather than "value" this scenario can happen fairly reliably.

I believe mitigation requires further thought than just withdrawing and ideally it would be best to setup a system similar to Vault Shares so that a withdrawal could be triggered either by available liquidity or via a withdrawal from the pool

I think severity is appropriate