CS Note 8.10: Sending NFTs Does Not Reset Delegation

[bingen]

Troves in Liquity V2 are transferable NFTs. This allows the user to transfer a trove, which means it could be sold on a marketplace. Users purchasing a trove should be aware that the delegation of the trove is not reset when the trove is transferred. This means the seller could set themselves as the remove manager and receiver before the transfer is executed (potentially setting it at the last second, frontrunning the purchase), then remove collateral from the trove after the transfer is completed.

As a result, purchasers of troves should be cautious and ensure that the purchase transaction includes a reset of the delegation.

Also note that delegation can be set in the zappers, so users must check this before delegating their trove to a zapper.

[bingen]

Trove NFTs are not meant to be traded. The transfer ability is meant to allow management (like cold/hot wallet setups) or integrations (open a trove from a contract and transfer to owner).
Some other things can be frontrun in a trade, like adjustTrove to a worse value.