Fixed the issue with open short (#1199)

* Added a fix for the open short insolvency * Added some testing and modified the fix slightly * Fixed the remaining tests
delvtech · Oct 24, 2024 · a78e12c · a78e12c
1 parent 0252ea4
commit a78e12c
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Showing 8 changed files with 39 additions and 11 deletions.
diff --git a/contracts/src/internal/HyperdriveShort.sol b/contracts/src/internal/HyperdriveShort.sol
@@ -99,6 +99,17 @@ abstract contract HyperdriveShort is IHyperdriveEvents, HyperdriveLP {
                 block.timestamp,
                 spotPrice
             );
+
+            // Adjust the base deposit to ensure that we are overestimating the
+            // amount of base that needs to be deposited to provide the required
+            // amount of vault shares for the pool to remain solvent.
+            //
+            // NOTE: We round up and add 1 wei to the base deposit to ensure
+            // that the deposit in shares is greater than or equal to the amount
+            // required to maintain solvency.
+            baseDeposit =
+                _convertToBase(baseDeposit.divUp(vaultSharePrice)) +
+                1;
         }
 
         // Take custody of the trader's deposit and ensure that the trader

diff --git a/test/instances/morpho-blue/MorphoBlue_USDe_DAI_Hyperdrive.t.sol b/test/instances/morpho-blue/MorphoBlue_USDe_DAI_Hyperdrive.t.sol
@@ -69,7 +69,7 @@ contract MorphoBlue_USDe_DAI_HyperdriveTest is
                 roundTripLongMaturityWithBaseUpperBoundTolerance: 1e3,
                 roundTripLongMaturityWithBaseTolerance: 1e5,
                 roundTripShortInstantaneousWithBaseUpperBoundTolerance: 1e3,
-                roundTripShortInstantaneousWithBaseTolerance: 1e5,
+                roundTripShortInstantaneousWithBaseTolerance: 1e7,
                 roundTripShortMaturityWithBaseTolerance: 1e10,
                 // NOTE: Share deposits and withdrawals are disabled, so these are
                 // 0.

diff --git a/test/instances/morpho-blue/MorphoBlue_sUSDe_DAI_Hyperdrive.t.sol b/test/instances/morpho-blue/MorphoBlue_sUSDe_DAI_Hyperdrive.t.sol
@@ -69,7 +69,7 @@ contract MorphoBlue_sUSDe_DAI_HyperdriveTest is
                 roundTripLongMaturityWithBaseUpperBoundTolerance: 1e3,
                 roundTripLongMaturityWithBaseTolerance: 1e5,
                 roundTripShortInstantaneousWithBaseUpperBoundTolerance: 1e3,
-                roundTripShortInstantaneousWithBaseTolerance: 1e5,
+                roundTripShortInstantaneousWithBaseTolerance: 1e8,
                 roundTripShortMaturityWithBaseTolerance: 1e10,
                 // NOTE: Share deposits and withdrawals are disabled, so these are
                 // 0.

diff --git a/test/instances/morpho-blue/MorphoBlue_wstETH_USDA_Hyperdrive.t.sol b/test/instances/morpho-blue/MorphoBlue_wstETH_USDA_Hyperdrive.t.sol
@@ -69,7 +69,7 @@ contract MorphoBlue_wstETH_USDA_HyperdriveTest is
                 roundTripLongMaturityWithBaseUpperBoundTolerance: 1e3,
                 roundTripLongMaturityWithBaseTolerance: 1e5,
                 roundTripShortInstantaneousWithBaseUpperBoundTolerance: 1e3,
-                roundTripShortInstantaneousWithBaseTolerance: 1e5,
+                roundTripShortInstantaneousWithBaseTolerance: 1e8,
                 roundTripShortMaturityWithBaseTolerance: 1e10,
                 // NOTE: Share deposits and withdrawals are disabled, so these are
                 // 0.

diff --git a/test/integrations/hyperdrive/NonstandardDecimals.sol b/test/integrations/hyperdrive/NonstandardDecimals.sol
@@ -54,7 +54,7 @@ contract NonstandardDecimalsTest is HyperdriveTest {
         (, uint256 shortBasePaid) = openShort(celine, bondAmount);
 
         // Ensure that the long and short fixed interest are equal.
-        assertApproxEqAbs(bondAmount - longBasePaid, shortBasePaid, 3);
+        assertApproxEqAbs(bondAmount - longBasePaid, shortBasePaid, 4);
     }
 
     function test_nonstandard_decimals_longs_outstanding() external {

diff --git a/test/units/hyperdrive/AddLiquidityTest.t.sol b/test/units/hyperdrive/AddLiquidityTest.t.sol
@@ -392,11 +392,12 @@ contract AddLiquidityTest is HyperdriveTest {
 
         // Ensure that all of the capital except for the minimum share reserves
         // and the zero address's LP present value was removed from the system.
-        assertEq(
+        assertApproxEqAbs(
             baseToken.balanceOf(address(hyperdrive)),
             (ONE + hyperdrive.lpSharePrice()).mulDown(
                 hyperdrive.getPoolConfig().minimumShareReserves
-            )
+            ),
+            1
         );
     }
 
@@ -502,11 +503,12 @@ contract AddLiquidityTest is HyperdriveTest {
 
         // Ensure that all of the capital except for the minimum share reserves
         // and the zero address's LP present value was removed from the system.
-        assertEq(
+        assertApproxEqAbs(
             baseToken.balanceOf(address(hyperdrive)),
             (ONE + hyperdrive.lpSharePrice()).mulDown(
                 hyperdrive.getPoolConfig().minimumShareReserves
-            )
+            ),
+            1
         );
     }
 

diff --git a/test/units/hyperdrive/OpenShortTest.t.sol b/test/units/hyperdrive/OpenShortTest.t.sol
@@ -488,10 +488,11 @@ contract OpenShortTest is HyperdriveTest {
         IHyperdrive.PoolInfo memory poolInfoAfter = hyperdrive.getPoolInfo();
 
         {
-            assertEq(
+            assertApproxEqAbs(
                 poolInfoAfter.shareReserves,
                 poolInfoBefore.shareReserves -
-                    baseProceeds.divDown(poolInfoBefore.vaultSharePrice)
+                    baseProceeds.divDown(poolInfoBefore.vaultSharePrice),
+                1
             );
             assertEq(
                 poolInfoAfter.vaultSharePrice,
@@ -573,7 +574,7 @@ contract OpenShortTest is HyperdriveTest {
             hyperdrive.getPoolInfo().vaultSharePrice
         );
         assertEq(eventAsBase, true);
-        assertEq(eventBaseProceeds, shortAmount - basePaid);
+        assertApproxEqAbs(eventBaseProceeds, shortAmount - basePaid, 1);
         assertEq(eventBondAmount, shortAmount);
     }
 }
diff --git a/test/utils/InstanceTest.sol b/test/utils/InstanceTest.sol
@@ -2673,6 +2673,20 @@ abstract contract InstanceTest is HyperdriveTest {
         );
         (uint256 maturityTime, uint256 basePaid) = openShort(bob, _shortAmount);
 
+        // Ensure that the pool has more shares than expected. This verifies
+        // that the pool is solvent.
+        assertGe(
+            hyperdrive.totalShares(),
+            hyperdrive.getPoolInfo().shareReserves +
+                (hyperdrive.getPoolInfo().shortsOutstanding +
+                    hyperdrive.getPoolInfo().shortsOutstanding.mulDown(
+                        hyperdrive.getPoolConfig().fees.flat
+                    )).divDown(hyperdrive.getPoolInfo().vaultSharePrice) +
+                hyperdrive.getUncollectedGovernanceFees() +
+                hyperdrive.getPoolInfo().withdrawalSharesProceeds +
+                hyperdrive.getPoolInfo().zombieShareReserves
+        );
+
         // Get some balance information before the withdrawal.
         (
             uint256 totalSupplyAssetsBefore,