adding the case for the dust liquidation (#187)

* adding the case for the dust liquidation

* adding an upgradeability check on the debt

* changing comments and tests here and there

Author: sogipec

contracts/deprecated/vaultManager/OldVaultManager.sol

@@ -50,10 +50,6 @@ contract OldVaultManagerStorage is IVaultManagerStorage, Initializable, Reentran
     // ================================= PARAMETERS ================================
     // Unless specified otherwise, parameters of this contract are expressed in `BASE_PARAMS`
 
-    uint256 public immutable dust;
-    /// @notice Minimum amount of collateral (in stablecoin value, e.g in `BASE_TOKENS = 10**18`) that can be left
-    ///  in a vault during a liquidation where the health factor function is decreasing
-    uint256 internal immutable _dustCollateral;
     /// @notice Maximum amount of stablecoins that can be issued with this contract (in `BASE_TOKENS`). This parameter should
     /// not be bigger than `type(uint256).max / BASE_INTEREST` otherwise there may be some overflows in the `increaseDebt` function
     uint256 public debtCeiling;
@@ -167,12 +163,6 @@ contract OldVaultManagerStorage is IVaultManagerStorage, Initializable, Reentran
     error TooSmallParameterValue();
     error ZeroAddress();
 
-    /// @param _dust Minimum amount of debt a vault from this implementation can have
-    /// @param dustCollateral_ Minimum amount of collateral (in stablecoin value) that can be left in a vault during a liquidation
-    /// where the health factor function is decreasing
-    /// @dev Run only at the implementation level
-    constructor(uint256 _dust, uint256 dustCollateral_) initializer {
-        dust = _dust;
-        _dustCollateral = dustCollateral_;
-    }
+    /// @custom:oz-upgrades-unsafe-allow constructor
+    constructor() initializer {}
 }

contracts/deprecated/vaultManager/OldVaultManagerStorage.sol

@@ -54,7 +54,11 @@ contract VaultManager is VaultManagerPermit, IVaultManagerFunctions {
     /// in a vault during a liquidation where the health factor function is decreasing
     uint256 internal _dustCollateral;
 
-    uint256[48] private __gapVaultManager;
+    /// @notice If the amount of debt of a vault that gets liquidated is below this amount, then the liquidator
+    /// can liquidate all the debt of the vault (and not just what's needed to get to the target health factor)
+    uint256 public dustLiquidation;
+
+    uint256[47] private __gapVaultManager;
 
     /// @inheritdoc IVaultManagerFunctions
     function initialize(
@@ -719,6 +723,7 @@ contract VaultManager is VaultManagerPermit, IVaultManagerFunctions {
             // Because we're rounding up in some divisions, `collateralReleased` can be greater than the `collateralAmount` of the vault
             // In this case, `stablecoinAmountToReceive` is still rounded up
             if (vault.collateralAmount <= collateralReleased) {
+                // Liquidators should never get more collateral than what's in the vault
                 collateralReleased = vault.collateralAmount;
                 // Remove all the vault's debt (debt repayed + bad debt) from VaultManager totalDebt
                 totalNormalizedDebt -= vault.normalizedDebt;
@@ -778,12 +783,11 @@ contract VaultManager is VaultManagerPermit, IVaultManagerFunctions {
             : BASE_PARAMS - liquidationDiscount;
         // Same for the surcharge here: it's in fact 1 - the fee taken by the protocol
         uint256 surcharge = liquidationSurcharge;
-        // Checking if we're in a situation where the health factor is an increasing or a decreasing function of the
-        // amount repaid
         uint256 maxAmountToRepay;
         uint256 thresholdRepayAmount;
-        // In the first case, the health factor is an increasing function of the stablecoin amount to repay,
-        // this means that the liquidator can bring the vault to the target health ratio
+        // Checking if we're in a situation where the health factor is an increasing or a decreasing function of the
+        // amount repaid. In the first case, the health factor is an increasing function which means that the liquidator
+        // can bring the vault to the target health ratio
         if (healthFactor * liquidationDiscount * surcharge >= collateralFactor * BASE_PARAMS**2) {
             // This is the max amount to repay that will bring the person to the target health factor
             // Denom is always positive when a vault gets liquidated in this case and when the health factor
@@ -794,32 +798,27 @@ contract VaultManager is VaultManagerPermit, IVaultManagerFunctions {
                     BASE_PARAMS *
                     liquidationDiscount) /
                 (surcharge * targetHealthFactor * liquidationDiscount - (BASE_PARAMS**2) * collateralFactor);
-            // The quantity below tends to be rounded in the above direction, which means that governance or guardians should
-            // set the `targetHealthFactor` accordingly
-            // Need to check for the dust: liquidating should not leave a dusty amount in the vault
-            if (currentDebt * BASE_PARAMS <= maxAmountToRepay * surcharge + dust * BASE_PARAMS) {
-                // If liquidating to the target threshold would leave a dusty amount: the liquidator can repay all
-                // We're rounding up the max amount to repay to make sure all the debt ends up being paid
-                // and we're computing again the real value of the debt to avoid propagation of rounding errors
+            // Need to check for the dustas liquidating should not leave a dusty amount in the vault
+            uint256 dustParameter = dustLiquidation;
+            if (currentDebt * BASE_PARAMS <= maxAmountToRepay * surcharge + dustParameter * BASE_PARAMS) {
+                // If liquidating to the target threshold would leave a dusty amount: the liquidator can repay all.
+                // We're avoiding here propagation of rounding errors and rounding up the max amount to repay to make
+                // sure all the debt ends up being paid
                 maxAmountToRepay =
                     (vault.normalizedDebt * newInterestAccumulator * BASE_PARAMS) /
                     (surcharge * BASE_INTEREST) +
                     1;
                 // In this case the threshold amount is such that it leaves just enough dust: amount is rounded
-                // down such that if a liquidator repays this amount then there would be more than `dust` left in
+                // down such that if a liquidator repays this amount then there is more than `dustLiquidation` left in
                 // the liquidated vault
-                if (currentDebt > dust)
-                    thresholdRepayAmount = ((currentDebt - dust) * BASE_PARAMS) / surcharge;
-                    // If there is from the beginning a dusty debt (because of an implementation upgrade), then
-                    // liquidator should repay everything that's left
+                if (currentDebt > dustParameter)
+                    thresholdRepayAmount = ((currentDebt - dustParameter) * BASE_PARAMS) / surcharge;
+                    // If there is from the beginning a dusty debt, then liquidator should repay everything that's left
                 else thresholdRepayAmount = 1;
             }
         } else {
-            // In all cases the liquidator can repay stablecoins such that they'll end up getting exactly the collateral
+            // In this case, the liquidator can repay stablecoins such that they'll end up getting exactly the collateral
             // in the liquidated vault
-            // Rounding up to make sure all gets liquidated in this case: the liquidator will never get more than the collateral
-            // amount in the vault however: we're performing the computation of the `collateralAmountInStable` again to avoid
-            // propagation of rounding errors
             maxAmountToRepay =
                 (vault.collateralAmount * liquidationDiscount * oracleValue) /
                 (BASE_PARAMS * _collatBase) +
@@ -864,7 +863,7 @@ contract VaultManager is VaultManagerPermit, IVaultManagerFunctions {
             borrowFee = param;
         } else if (what == "RF") {
             // As liquidation surcharge is stored as `1-fee` and as we need `repayFee` to be smaller
-            // then the liquidation surcharge, then we need to have:
+            // than the liquidation surcharge, we need to have:
             // `liquidationSurcharge <= BASE_PARAMS - repayFee` and as such `liquidationSurcharge + repayFee <= BASE_PARAMS`
             if (param + liquidationSurcharge > BASE_PARAMS) revert TooHighParameterValue();
             repayFee = param;
@@ -933,10 +932,17 @@ contract VaultManager is VaultManagerPermit, IVaultManagerFunctions {
 
     /// @notice Sets the dust variables
     /// @param _dust New minimum debt allowed
+    /// @param _dustLiquidation New `dustLiquidation` value
     /// @param dustCollateral_ New minimum collateral allowed in a vault after a liquidation
     /// @dev dustCollateral_ is in stable value
-    function setDusts(uint256 _dust, uint256 dustCollateral_) external onlyGovernor {
+    function setDusts(
+        uint256 _dust,
+        uint256 _dustLiquidation,
+        uint256 dustCollateral_
+    ) external onlyGovernor {
+        if (_dust > _dustLiquidation) revert InvalidParameterValue();
         dust = _dust;
+        dustLiquidation = _dustLiquidation;
         _dustCollateral = dustCollateral_;
     }
 

contracts/vaultManager/VaultManager.sol

@@ -7,14 +7,14 @@ const func: DeployFunction = async ({ deployments, ethers }) => {
   const { deployer } = await ethers.getNamedSigners();
 
   console.log('Now deploying the implementation for VaultManager');
-  await deploy('VaultManager_Implementation', {
+  await deploy('VaultManager_V2_0_Implementation', {
     contract: 'VaultManagerLiquidationBoost',
     from: deployer.address,
     args: [],
     log: !argv.ci,
   });
 
-  const vaultManagerImplementation = (await ethers.getContract('VaultManager_Implementation')).address;
+  const vaultManagerImplementation = (await ethers.getContract('VaultManager_V2_0_Implementation')).address;
 
   console.log(`Successfully deployed the implementation for VaultManager at ${vaultManagerImplementation}`);
   console.log('');

deploy/5_vaultManagerImplementation.ts

@@ -143,10 +143,10 @@ const config: HardhatUserConfig = {
       forking: {
         enabled: argv.fork || false,
         // Mainnet
-        /*
+
         url: nodeUrl('fork'),
-        blockNumber: 15975107,
-        */
+        blockNumber: 16218353,
+
         // Polygon
         /*
         url: nodeUrl('forkpolygon'),
@@ -164,9 +164,10 @@ const config: HardhatUserConfig = {
         blockNumber: 19356874,
         */
         // Avalanche
-
+        /*
         url: nodeUrl('avalanche'),
         blockNumber: 23545788,
+        */
       },
       mining: argv.disableAutoMining
         ? {

hardhat.config.ts

@@ -14,7 +14,9 @@ async function main() {
 
   const vaultManagerAddress = '0x73aaf8694BA137a7537E7EF544fcf5E2475f227B';
 
-  const implementation = (await deployments.get('VaultManagerNoDust_Implementation')).address;
+  const implementation = (await deployments.get('VaultManager_V2_0_Implementation')).address;
+
+  console.log(implementation);
 
   const proxyAdminAddress = CONTRACTS_ADDRESSES[ChainId.MAINNET].ProxyAdmin!;
 
@@ -58,8 +60,9 @@ async function main() {
   console.log(await vaultManager.name());
   console.log(await vaultManager.symbol());
 
-  await vaultManager.connect(signer).setDusts(10, 10);
+  await vaultManager.connect(signer).setDusts(10, 10, 10);
   console.log((await vaultManager.dust()).toString());
+  console.log((await vaultManager.dustLiquidation()).toString());
 
   console.log((await vaultManager.vaultData(8)).collateralAmount.toString());
   console.log((await vaultManager.vaultData(8)).normalizedDebt.toString());

scripts/mainnet-fork/upgradeVaultManager.ts

@@ -122,7 +122,7 @@ contract('Reactor', () => {
     stableMaster = await new MockStableMaster__factory(deployer).deploy();
 
     await vaultManager.initialize(treasury.address, ANGLE.address, oracle.address, params, 'USDC/agEUR');
-    await vaultManager.connect(governor).setDusts(0.1e15, 0.1e15);
+    await vaultManager.connect(governor).setDusts(0.1e15, 0.1e15, 0.1e15);
     await vaultManager.connect(guardian).togglePause();
 
     reactor = (await deployUpgradeable(new Reactor__factory(deployer))) as Reactor;

test/hardhat/reactor/reactor.test.ts

@@ -130,7 +130,7 @@ contract('VaultManagerLiquidationBoost', () => {
     await vaultManager.initialize(treasury.address, collateral.address, oracle.address, params, 'USDC/agEUR');
     await vaultManager.connect(guardian).togglePause();
     await vaultManager.connect(governor).setUint64(params.borrowFee, formatBytes32String('BF'));
-    await vaultManager.connect(governor).setDusts(0.1e9, 0.1e9);
+    await vaultManager.connect(governor).setDusts(0.1e9, 0.1e9, 0.1e9);
   });
   describe('oracle', () => {
     it('success - read', async () => {
@@ -1178,7 +1178,7 @@ contract('VaultManagerLiquidationBoost', () => {
       await treasury.addMinter(agToken.address, vaultManager.address);
       oracle = await new MockOracle__factory(deployer).deploy(parseUnits('2', 18), treasury.address);
       await vaultManager.initialize(treasury.address, agToken.address, oracle.address, params, 'USDC/agEUR');
-      await vaultManager.connect(governor).setDusts(0.1e9, 0.1e9);
+      await vaultManager.connect(governor).setDusts(0.1e9, 0.1e9, 0.1e9);
       await vaultManager.connect(guardian).togglePause();
     });
     it('success - allowance given', async () => {
@@ -2263,7 +2263,7 @@ contract('VaultManagerLiquidationBoost', () => {
       params.interestRate = parseEther('0');
       params.borrowFee = 0;
       await vaultManager.initialize(treasury.address, collateral.address, oracle.address, params, 'USDC/agEUR');
-      await vaultManager.connect(governor).setDusts(parseEther('0.5'), parseEther('0.5'));
+      await vaultManager.connect(governor).setDusts(parseEther('0.5'), parseEther('0.5'), parseEther('0.5'));
       await vaultManager.connect(guardian).togglePause();
       await treasury.setVaultManager2(vaultManager.address);
       await treasury.addMinter(agToken.address, vaultManager.address);
@@ -2289,7 +2289,7 @@ contract('VaultManagerLiquidationBoost', () => {
       params.interestRate = parseEther('0');
       params.borrowFee = 0;
       await vaultManager.initialize(treasury.address, collateral.address, oracle.address, params, 'USDC/agEUR');
-      await vaultManager.connect(governor).setDusts(parseEther('0.5'), parseEther('0.5'));
+      await vaultManager.connect(governor).setDusts(parseEther('0.5'), parseEther('0.5'), parseEther('0.5'));
       await vaultManager.connect(guardian).togglePause();
       await treasury.setVaultManager2(vaultManager.address);
       await treasury.addMinter(agToken.address, vaultManager.address);