Definition ∞ An over-borrowing vulnerability is a security flaw in a lending protocol or smart contract that allows a malicious actor to borrow more assets than their collateral should permit. This typically results from faulty collateral valuation, reentrancy attacks, or logic errors in the borrowing mechanism. Exploiting this vulnerability can lead to significant losses for the protocol and its liquidity providers. It poses a direct threat to protocol solvency.
Context ∞ Over-borrowing vulnerabilities represent a severe risk within decentralized finance lending platforms, as they can directly compromise the solvency of the protocol. Security audits and rigorous testing are essential to identify and mitigate these flaws before deployment. News reports often detail instances where such vulnerabilities have been exploited, leading to substantial financial damages and highlighting the continuous need for robust smart contract security.
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