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FLO-3 panic if topUpSource deposit leaves position liquidatable #242

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FLO-3 panic if topUpSource deposit leaves position liquidatable #242

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32 changes: 18 additions & 14 deletions cadence/contracts/FlowALPv0.cdc
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Original file line number Diff line number Diff line change
Expand Up @@ -312,7 +312,7 @@ access(all) contract FlowALPv0 {
if let tokenState = self.state.getTokenState(tokenType) {
return tokenState.getInsuranceRate()
}

return nil
}

Expand Down Expand Up @@ -501,7 +501,7 @@ access(all) contract FlowALPv0 {
post {
!self.state.isPositionLocked(pid): "Position is not unlocked"
}

self.lockPosition(pid)

let positionView = self.buildPositionView(pid: pid)
Expand All @@ -521,7 +521,7 @@ access(all) contract FlowALPv0 {
let Pc_oracle = self.config.getPriceOracle().price(ofToken: seizeType)! // collateral price given by oracle ($/C)
// Price of collateral, denominated in debt token, implied by oracle (D/C)
// Oracle says: "1 unit of collateral is worth `Pcd_oracle` units of debt"
let Pcd_oracle = Pc_oracle / Pd_oracle
let Pcd_oracle = Pc_oracle / Pd_oracle

// Compute the health factor which would result if we were to accept this liquidation
let Ce_pre = balanceSheet.effectiveCollateral // effective collateral pre-liquidation
Expand All @@ -532,7 +532,7 @@ access(all) contract FlowALPv0 {
// Ce_seize = effective value of seized collateral ($)
let Ce_seize = FlowALPMath.effectiveCollateral(credit: UFix128(seizeAmount), price: UFix128(Pc_oracle), collateralFactor: Fc)
// De_seize = effective value of repaid debt ($)
let De_seize = FlowALPMath.effectiveDebt(debit: UFix128(repayAmount), price: UFix128(Pd_oracle), borrowFactor: Fd)
let De_seize = FlowALPMath.effectiveDebt(debit: UFix128(repayAmount), price: UFix128(Pd_oracle), borrowFactor: Fd)
let Ce_post = Ce_pre - Ce_seize // position's total effective collateral after liquidation ($)
let De_post = De_pre - De_seize // position's total effective debt after liquidation ($)
let postHealth = FlowALPMath.healthComputation(effectiveCollateral: Ce_post, effectiveDebt: De_post)
Expand All @@ -551,9 +551,9 @@ access(all) contract FlowALPv0 {
message: "DEX/oracle price deviation too large. Dex price: \(Pcd_dex), Oracle price: \(Pcd_oracle)")
// Execute the liquidation
let seizedCollateral <- self._doLiquidation(pid: pid, repayment: <-repayment, debtType: debtType, seizeType: seizeType, seizeAmount: seizeAmount)

self.unlockPosition(pid)

return <- seizedCollateral
}

Expand All @@ -563,7 +563,7 @@ access(all) contract FlowALPv0 {
access(self) fun _doLiquidation(pid: UInt64, repayment: @{FungibleToken.Vault}, debtType: Type, seizeType: Type, seizeAmount: UFix64): @{FungibleToken.Vault} {
pre {
!self.isPausedOrWarmup(): "Liquidations are paused by governance"
// position must have debt and collateral balance
// position must have debt and collateral balance
}

let repayAmount = repayment.balance
Expand Down Expand Up @@ -1670,7 +1670,7 @@ access(all) contract FlowALPv0 {
// Validate constraint: non-zero rate requires swapper
if insuranceRate > 0.0 {
assert(
tsRef.getInsuranceSwapper() != nil,
tsRef.getInsuranceSwapper() != nil,
message:"Cannot set non-zero insurance rate without an insurance swapper configured for \(tokenType.identifier)",
)
}
Expand All @@ -1689,13 +1689,13 @@ access(all) contract FlowALPv0 {
self.isTokenSupported(tokenType: tokenType): "Unsupported token type"
}
let tsRef = self.state.borrowTokenState(tokenType)
?? panic("Invariant: token state missing")
?? panic("Invariant: token state missing")

if let swapper = swapper {
// Validate swapper types match
assert(swapper.inType() == tokenType, message: "Swapper input type must match token type")
assert(swapper.outType() == Type<@MOET.Vault>(), message: "Swapper output type must be MOET")

} else {
// cannot remove swapper if insurance rate > 0
assert(
Expand Down Expand Up @@ -1779,7 +1779,7 @@ access(all) contract FlowALPv0 {
let tsRef = self.state.borrowTokenState(tokenType)
?? panic("Invariant: token state missing")
tsRef.setStabilityFeeRate(stabilityFeeRate)

FlowALPEvents.emitStabilityFeeRateUpdated(
poolUUID: self.uuid,
tokenType: tokenType.identifier,
Expand All @@ -1800,7 +1800,7 @@ access(all) contract FlowALPv0 {
fundRef.balance >= amount,
message: "Insufficient stability fund balance. Available: \(fundRef.balance), requested: \(amount)"
)

let withdrawn <- fundRef.withdraw(amount: amount)
recipient.deposit(from: <-withdrawn)

Expand Down Expand Up @@ -1928,6 +1928,10 @@ access(all) contract FlowALPv0 {
pid: pid,
from: <-pulledVault,
)

// Post-deposit health check: panic if the position is still liquidatable.
let newBalanceSheet = self._getUpdatedBalanceSheet(pid: pid)
assert(newBalanceSheet.health >= 1.0, message: "topUpSource insufficient to save position from liquidation")
}
} else if balanceSheet.health > position.getTargetHealth() {
// The position is overcollateralized,
Expand Down Expand Up @@ -2271,7 +2275,7 @@ access(all) contract FlowALPv0 {
access(self) fun updateInterestRatesAndCollectInsurance(tokenType: Type) {
let tokenState = self._borrowUpdatedTokenState(type: tokenType)
tokenState.updateInterestRates()

// Collect insurance if swapper is configured
// Ensure reserves exist for this token type
if !self.state.hasReserve(tokenType) {
Expand Down Expand Up @@ -2353,7 +2357,7 @@ access(all) contract FlowALPv0 {
access(all) fun getDefaultToken(): Type {
return self.state.getDefaultToken()
}

/// Returns the deposit capacity and deposit capacity cap for a given token type
access(all) fun getDepositCapacityInfo(type: Type): {String: UFix64} {
let tokenState = self._borrowUpdatedTokenState(type: type)
Expand Down
66 changes: 65 additions & 1 deletion cadence/tests/rebalance_undercollateralised_test.cdc
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Original file line number Diff line number Diff line change
Expand Up @@ -109,4 +109,68 @@ fun testRebalanceUndercollateralised() {
// Ensure health is at least the minimum threshold (1.1)
Test.assert(healthAfterRebalance >= INT_MIN_HEALTH,
message: "Health after rebalance should be at least the minimum \(INT_MIN_HEALTH) but was ".concat(healthAfterRebalance.toString()))
}
}

/// Verifies that rebalancing panics when the topUpSource cannot supply enough funds to
/// bring health to ≥ 1.0. Without the fix, the protocol would deposit the insufficient
/// amount into the doomed position, trapping the user's backup funds for liquidators.
access(all)
fun testRebalanceUndercollateralised_InsufficientTopUpSource() {
Test.reset(to: snapshot)

let initialPrice = 1.0
setMockOraclePrice(signer: PROTOCOL_ACCOUNT, forTokenIdentifier: FLOW_TOKEN_IDENTIFIER, price: initialPrice)

createAndStorePool(signer: PROTOCOL_ACCOUNT, defaultTokenIdentifier: MOET_TOKEN_IDENTIFIER, beFailed: false)
addSupportedTokenZeroRateCurve(
signer: PROTOCOL_ACCOUNT,
tokenTypeIdentifier: FLOW_TOKEN_IDENTIFIER,
collateralFactor: 0.8,
borrowFactor: 1.0,
depositRate: 1_000_000.0,
depositCapacityCap: 1_000_000.0
)

let user = Test.createAccount()
setupMoetVault(user, beFailed: false)
mintFlow(to: user, amount: 1_000.0)
grantBetaPoolParticipantAccess(PROTOCOL_ACCOUNT, user)

// Open position: user deposits 1000 FLOW, receives ~615 MOET in their vault (topUpSource).
let openRes = executeTransaction(
"../transactions/flow-alp/position/create_position.cdc",
[1_000.0, FLOW_VAULT_STORAGE_PATH, true],
user
)
Test.expect(openRes, Test.beSucceeded())

// Drain nearly all MOET from the user's vault, leaving only 5.0.
// The topUpSource now holds far less than the ~215 MOET needed to restore health to 1.0
// after the price crash below.
let receiver = Test.createAccount()
setupMoetVault(receiver, beFailed: false)
let userMoetBalance = getBalance(address: user.address, vaultPublicPath: MOET.VaultPublicPath)!
transferFungibleTokens(
tokenIdentifier: MOET_TOKEN_IDENTIFIER,
from: user,
to: receiver,
amount: userMoetBalance - 5.0
)

// Crash the price by 50% so health falls well below 1.0.
// Effective collateral: 1000 * 0.5 * 0.8 = 400; debt ~615 → health ≈ 0.65.
// Restoring to health 1.0 requires ~215 MOET; the source has only 5.
setMockOraclePrice(signer: PROTOCOL_ACCOUNT, forTokenIdentifier: FLOW_TOKEN_IDENTIFIER, price: initialPrice * 0.5)

Test.assert(getPositionHealth(pid: 0, beFailed: false) < 1.0,
message: "Position should be liquidatable after price crash")

// Rebalance must panic: depositing 5 MOET cannot rescue the position.
let rebalanceRes = _executeTransaction(
"../transactions/flow-alp/pool-management/rebalance_position.cdc",
[ 0 as UInt64, true ],
PROTOCOL_ACCOUNT
)
Test.expect(rebalanceRes, Test.beFailed())
Test.assertError(rebalanceRes, errorMessage: "topUpSource insufficient to save position from liquidation")
}
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