feat!: liquidation directly rewards base assets (#1118)

## Description Significant Change: - Instead of receiving uToken rewards on `MsgLiquidate`, liquidator receives equivalent base assets. Reasoning: We're about to add `MaxCollateralUtilization` which restricts `MsgWithdraw` at critical times, so `AvailableSupply` can be used for liquidation. But if liquidators receive their rewards as uTokens, then the `MsgWithdraw` restriction will apply to them just like any other user, and they will be unable to receive their base tokens. Switching to base assets received eliminates makes `MaxCollateralUtilization` work as intended, and also simplifies the `MsgLiquidate -> MsgWithdraw -> IBC (to sell reward)` liquidation workflow to just `MsgLiquidate -> IBC` --- API Breaking: - Reverts `MsgLiquidate`'s reward `sdk.Coin` field to reward_denom `string` Reasoning: That field was for rare cases where liquidators do not trust the umee `x/oracle` and want to put their own price floors. Such cases should be handled off-chain (just query prices) rather than adding a computation and required field for all users. See #828 --- closes: #898 closes: #828 relevant to #831 - because rounding up repayment and reward eliminates most "dust" liquidation remainders --- ### Author Checklist _All items are required. Please add a note to the item if the item is not applicable and please add links to any relevant follow up issues._ I have... - [x] included the correct [type prefix](https://github.com/commitizen/conventional-commit-types/blob/v3.0.0/index.json) in the PR title - [x] added `!` to the type prefix if API or client breaking change - [x] added appropriate labels to the PR - [x] targeted the correct branch (see [PR Targeting](https://github.com/umee-network/umee/blob/main/CONTRIBUTING.md#pr-targeting)) - [x] provided a link to the relevant issue or specification - [x] added a changelog entry to `CHANGELOG.md` - [x] included comments for [documenting Go code](https://blog.golang.org/godoc) - [x] updated the relevant documentation or specification - [x] reviewed "Files changed" and left comments if necessary - [x] confirmed all CI checks have passed ### Reviewers Checklist _All items are required. Please add a note if the item is not applicable and please add your handle next to the items reviewed if you only reviewed selected items._ I have... - [ ] confirmed the correct [type prefix](https://github.com/commitizen/conventional-commit-types/blob/v3.0.0/index.json) in the PR title - [ ] confirmed all author checklist items have been addressed - [ ] reviewed state machine logic - [ ] reviewed API design and naming - [ ] reviewed documentation is accurate - [ ] reviewed tests and test coverage - [ ] manually tested (if applicable)
umee-network · Aug 4, 2022 · af827ba · af827ba
1 parent e1a6f1f
commit af827ba
Show file tree

Hide file tree

Showing 23 changed files with 818 additions and 524 deletions.
diff --git a/CHANGELOG.md b/CHANGELOG.md
@@ -56,6 +56,7 @@ Ref: https://keepachangelog.com/en/1.0.0/
 - [1123](https://github.com/umee-network/umee/pull/1123) Shorten all leverage and oracle query structs by removing the Request suffix.
 - [1125](https://github.com/umee-network/umee/pull/1125) Refactor: remove proto getters in x/leverage and x/oracle proto types.
 - [1126](https://github.com/umee-network/umee/pull/1126) Update proto json tag from `APY` to `apy`.
+- [1118](https://github.com/umee-network/umee/pull/1118) MsgLiquidate now has reward denom instead of full coin
 - [1130](https://github.com/umee-network/umee/pull/1130) Update proto json tag to lower case.
 - [1140](https://github.com/umee-network/umee/pull/1140) Rename MarketSize query to TotalSuppliedValue, and TokenMarketSize to TotalSupplied.
 - [1188](https://github.com/umee-network/umee/pull/1188) Remove all individual queries which duplicate market_summary fields.
@@ -72,6 +73,7 @@ Ref: https://keepachangelog.com/en/1.0.0/
 - [1094](https://github.com/umee-network/umee/pull/1094) Added TotalCollateral query.
 - [1099](https://github.com/umee-network/umee/pull/1099) Added TotalBorrowed query.
 - [1157](https://github.com/umee-network/umee/pull/1157) Added `PrintOrErr` util function optimizing the CLI code flow.
+- [1118](https://github.com/umee-network/umee/pull/1118) MsgLiquidate rewards base assets instead of requiring an addtional MsgWithdraw
 - [1159](https://github.com/umee-network/umee/pull/1159) Add `max_supply_utilization` and `min_collateral_liquidity` to the x/leverage token registry.
 - [1188](https://github.com/umee-network/umee/pull/1188) Add `liquidity`, `maximum_borrow`, `maximum_collateral`, `minimum_liquidity`, `available_withdraw`, `available_collateralize`, and `utoken_supply` fields to market summary.
 - [1203](https://github.com/umee-network/umee/pull/1203) Add Swagger docs.

diff --git a/proto/umee/leverage/v1/tx.proto b/proto/umee/leverage/v1/tx.proto
@@ -32,7 +32,7 @@ service Msg {
   rpc Repay(MsgRepay) returns (MsgRepayResponse);
 
   // Liquidate allows a user to repay a different user's borrowed coins in exchange for some
-  // of their collateral.
+  // of the target's collateral.
   rpc Liquidate(MsgLiquidate) returns (MsgLiquidateResponse);
 }
 
@@ -85,15 +85,21 @@ message MsgRepay {
   cosmos.base.v1beta1.Coin asset    = 2 [(gogoproto.nullable) = false];
 }
 
-// MsgLiquidate represents a liquidator's request to repay a specific borrower's
-// borrowed base asset type to the module in exchange for collateral reward.
+// MsgLiquidate is the request structure for the Liquidate RPC.
 message MsgLiquidate {
   // Liquidator is the account address performing a liquidation and the signer
   // of the message.
-  string                   liquidator = 1;
-  string                   borrower   = 2;
-  cosmos.base.v1beta1.Coin repayment  = 3 [(gogoproto.nullable) = false];
-  cosmos.base.v1beta1.Coin reward     = 4 [(gogoproto.nullable) = false];
+  string                   liquidator   = 1;
+  // Borrower is the account whose borrow is being repaid, and collateral consumed,
+  // by the liquidation. It does not sign the message.
+  string                   borrower     = 2;
+  // Repayment is the maximum amount of base tokens that the liquidator is willing
+  // to repay.
+  cosmos.base.v1beta1.Coin repayment    = 3 [(gogoproto.nullable) = false];
+  // RewardDenom is the base token denom that the liquidator is willing to accept
+  // as a liquidation reward. The uToken equivalent of any base token rewards
+  // will be taken from the borrower's collateral.
+  string                   reward_denom = 4;
 }
 
 // MsgSupplyResponse defines the Msg/Supply response type.
@@ -113,11 +119,20 @@ message MsgBorrowResponse {}
 
 // MsgRepayResponse defines the Msg/Repay response type.
 message MsgRepayResponse {
+  // Repaid is the amount of debt, in base tokens, that was repaid to the
+  // module by the borrower.
   cosmos.base.v1beta1.Coin repaid = 1 [(gogoproto.nullable) = false];
 }
 
 // MsgLiquidateResponse defines the Msg/Liquidate response type.
 message MsgLiquidateResponse {
-  cosmos.base.v1beta1.Coin repaid = 1 [(gogoproto.nullable) = false];
-  cosmos.base.v1beta1.Coin reward = 2 [(gogoproto.nullable) = false];
+  // Repaid is the amount of debt, in base tokens, that liquidator repaid
+  // to the module on behalf of the borrower.
+  cosmos.base.v1beta1.Coin repaid     = 1 [(gogoproto.nullable) = false];
+  // Collateral is the amount of the borrower's uToken collateral that
+  // was converted to the reward tokens as a result of liquidation.
+  cosmos.base.v1beta1.Coin collateral = 2 [(gogoproto.nullable) = false];
+  // Reward is the amount of base tokens that the liquidator received from
+  // the module as reward for the liquidation.
+  cosmos.base.v1beta1.Coin reward     = 3 [(gogoproto.nullable) = false];
 }
diff --git a/x/leverage/client/cli/tx.go b/x/leverage/client/cli/tx.go
@@ -243,9 +243,20 @@ func GetCmdRepay() *cobra.Command {
 // transaction with a MsgLiquidate message.
 func GetCmdLiquidate() *cobra.Command {
 	cmd := &cobra.Command{
-		Use:   "liquidate [liquidator] [borrower] [amount] [reward]",
+		Use:   "liquidate [liquidator] [borrower] [amount] [reward-denom]",
 		Args:  cobra.ExactArgs(4),
 		Short: "Liquidate a specified amount of a borrower's debt for a chosen reward denomination",
+		Long: strings.TrimSpace(
+			fmt.Sprintf(`
+Liquidate up to a specified amount of a borrower's debt for a chosen reward denomination.
+
+Example:
+$ umeed tx leverage liquidate %s %s  50000000uumee u/uumee --from mykey`,
+				"umee16jgsjqp7h0mpahlkw3p6vp90vd3jhn5tz6lcex",
+				"umee1qqy7cst5qm83ldupph2dcq0wypprkfpc9l3jg2",
+			),
+		),
+
 		RunE: func(cmd *cobra.Command, args []string) error {
 			if err := cmd.Flags().Set(flags.FlagFrom, args[0]); err != nil {
 				return err
@@ -266,13 +277,13 @@ func GetCmdLiquidate() *cobra.Command {
 				return err
 			}
 
-			reward, err := sdk.ParseCoinNormalized(args[3])
-			if err != nil {
+			rewardDenom := args[3]
+
+			msg := types.NewMsgLiquidate(clientCtx.GetFromAddress(), borrowerAddr, asset, rewardDenom)
+			if err = msg.ValidateBasic(); err != nil {
 				return err
 			}
 
-			msg := types.NewMsgLiquidate(clientCtx.GetFromAddress(), borrowerAddr, asset, reward)
-
 			return tx.GenerateOrBroadcastTxCLI(clientCtx, cmd.Flags(), msg)
 		},
 	}

diff --git a/x/leverage/client/tests/tests.go b/x/leverage/client/tests/tests.go
@@ -166,17 +166,7 @@ func (s *IntegrationTestSuite) TestLeverageScenario() {
 			val.Address.String(),
 			val.Address.String(),
 			"5uumee",
-			"4uumee",
-		},
-		nil,
-	}
-
-	fixCollateral := testTransaction{
-		"add back collateral received from liquidation",
-		cli.GetCmdCollateralize(),
-		[]string{
-			val.Address.String(),
-			"4u/uumee",
+			"uumee",
 		},
 		nil,
 	}
@@ -186,7 +176,7 @@ func (s *IntegrationTestSuite) TestLeverageScenario() {
 		cli.GetCmdRepay(),
 		[]string{
 			val.Address.String(),
-			"51uumee",
+			"50uumee",
 		},
 		nil,
 	}
@@ -196,7 +186,7 @@ func (s *IntegrationTestSuite) TestLeverageScenario() {
 		cli.GetCmdDecollateralize(),
 		[]string{
 			val.Address.String(),
-			"1000u/uumee",
+			"950u/uumee",
 		},
 		nil,
 	}
@@ -206,14 +196,14 @@ func (s *IntegrationTestSuite) TestLeverageScenario() {
 		cli.GetCmdWithdraw(),
 		[]string{
 			val.Address.String(),
-			"1000u/uumee",
+			"950u/uumee",
 		},
 		nil,
 	}
 
 	nonzeroQueries := []TestCase{
 		testQuery{
-			"query account summary",
+			"query account balances",
 			cli.GetCmdQueryAccountBalances(),
 			[]string{
 				val.Address.String(),
@@ -222,18 +212,18 @@ func (s *IntegrationTestSuite) TestLeverageScenario() {
 			&types.QueryAccountBalancesResponse{},
 			&types.QueryAccountBalancesResponse{
 				Supplied: sdk.NewCoins(
-					sdk.NewInt64Coin(umeeapp.BondDenom, 1001),
+					sdk.NewInt64Coin(umeeapp.BondDenom, 1000),
 				),
 				Collateral: sdk.NewCoins(
 					sdk.NewInt64Coin(types.UTokenFromTokenDenom(umeeapp.BondDenom), 1000),
 				),
 				Borrowed: sdk.NewCoins(
-					sdk.NewInt64Coin(umeeapp.BondDenom, 47),
+					sdk.NewInt64Coin(umeeapp.BondDenom, 51),
 				),
 			},
 		},
 		testQuery{
-			"query account health",
+			"query account summary",
 			cli.GetCmdQueryAccountSummary(),
 			[]string{
 				val.Address.String(),
@@ -244,16 +234,16 @@ func (s *IntegrationTestSuite) TestLeverageScenario() {
 				// This result is umee's oracle exchange rate from
 				// app/test_helpers.go/IntegrationTestNetworkConfig
 				// times the amount of umee, and then times params
-				// (1001 / 1000000) * 34.21 = 0.03424421
-				SuppliedValue: sdk.MustNewDecFromStr("0.03424421"),
-				// (1001 / 1000000) * 34.21 = 0.03424421
-				CollateralValue: sdk.MustNewDecFromStr("0.03424421"),
-				// (47 / 1000000) * 34.21 = 0.00160787
-				BorrowedValue: sdk.MustNewDecFromStr("0.00160787"),
-				// (1001 / 1000000) * 34.21 * 0.05 = 0.0017122105
-				BorrowLimit: sdk.MustNewDecFromStr("0.0017122105"),
-				// (1001 / 1000000) * 0.05 * 34.21 = 0.0017122105
-				LiquidationThreshold: sdk.MustNewDecFromStr("0.0017122105"),
+				// (1000 / 1000000) * 34.21 = 0.03421
+				SuppliedValue: sdk.MustNewDecFromStr("0.03421"),
+				// (1000 / 1000000) * 34.21 = 0.03421
+				CollateralValue: sdk.MustNewDecFromStr("0.03421"),
+				// (51 / 1000000) * 34.21 = 0.00174471
+				BorrowedValue: sdk.MustNewDecFromStr("0.00174471"),
+				// (1000 / 1000000) * 34.21 * 0.05 = 0.0017105
+				BorrowLimit: sdk.MustNewDecFromStr("0.0017105"),
+				// (1000 / 1000000) * 0.05 * 34.21 = 0.0017105
+				LiquidationThreshold: sdk.MustNewDecFromStr("0.0017105"),
 			},
 		},
 	}
@@ -266,17 +256,16 @@ func (s *IntegrationTestSuite) TestLeverageScenario() {
 		supply,
 		addCollateral,
 		borrow,
-		liquidate,
-		fixCollateral,
 	)
 
-	// These transactions are deferred to run after nonzero queries are finished
-	defer s.runTestCases(
+	// These queries run while the supplying and borrowing is active to produce nonzero output
+	s.runTestCases(nonzeroQueries...)
+
+	// These transactions run after nonzero queries are finished
+	s.runTestCases(
+		liquidate,
 		repay,
 		removeCollateral,
 		withdraw,
 	)
-
-	// These queries run while the supplying and borrowing is active to produce nonzero output
-	s.runTestCases(nonzeroQueries...)
 }
diff --git a/x/leverage/keeper/borrows.go b/x/leverage/keeper/borrows.go
@@ -87,19 +87,21 @@ func (k Keeper) CalculateBorrowLimit(ctx sdk.Context, collateral sdk.Coins) (sdk
 			return sdk.ZeroDec(), err
 		}
 
-		// get USD value of base assets
-		v, err := k.TokenValue(ctx, baseAsset)
-		if err != nil {
-			return sdk.ZeroDec(), err
-		}
-
 		ts, err := k.GetTokenSettings(ctx, baseAsset.Denom)
 		if err != nil {
 			return sdk.ZeroDec(), err
 		}
 
-		// add each collateral coin's weighted value to borrow limit
-		limit = limit.Add(v.Mul(ts.CollateralWeight))
+		// ignore blacklisted tokens
+		if !ts.Blacklist {
+			// get USD value of base assets
+			v, err := k.TokenValue(ctx, baseAsset)
+			if err != nil {
+				return sdk.ZeroDec(), err
+			}
+			// add each collateral coin's weighted value to borrow limit
+			limit = limit.Add(v.Mul(ts.CollateralWeight))
+		}
 	}
 
 	return limit, nil
@@ -120,18 +122,22 @@ func (k Keeper) CalculateLiquidationThreshold(ctx sdk.Context, collateral sdk.Co
 			return sdk.ZeroDec(), err
 		}
 
-		// get USD value of base assets
-		v, err := k.TokenValue(ctx, baseAsset)
-		if err != nil {
-			return sdk.ZeroDec(), err
-		}
-
 		ts, err := k.GetTokenSettings(ctx, baseAsset.Denom)
 		if err != nil {
 			return sdk.ZeroDec(), err
 		}
 
-		totalThreshold = totalThreshold.Add(v.Mul(ts.LiquidationThreshold))
+		// ignore blacklisted tokens
+		if !ts.Blacklist {
+			// get USD value of base assets
+			v, err := k.TokenValue(ctx, baseAsset)
+			if err != nil {
+				return sdk.ZeroDec(), err
+			}
+
+			// add each collateral coin's weighted value to liquidation threshold
+			totalThreshold = totalThreshold.Add(v.Mul(ts.LiquidationThreshold))
+		}
 	}
 
 	return totalThreshold, nil

diff --git a/x/leverage/keeper/filter.go b/x/leverage/keeper/filter.go
@@ -0,0 +1,26 @@
+package keeper
+
+import (
+	sdk "github.com/cosmos/cosmos-sdk/types"
+)
+
+// filterCoins returns the subset of an sdk.Coins that meet a given condition
+func (k Keeper) filterCoins(coins sdk.Coins, accept func(sdk.Coin) bool) sdk.Coins {
+	filtered := sdk.Coins{}
+	for _, c := range coins {
+		if accept(c) {
+			filtered = append(filtered, c)
+		}
+	}
+	return filtered
+}
+
+// filterAcceptedCoins returns the subset of an sdk.Coins that are accepted, non-blacklisted tokens
+func (k Keeper) filterAcceptedCoins(ctx sdk.Context, coins sdk.Coins) sdk.Coins {
+	return k.filterCoins(
+		coins,
+		func(c sdk.Coin) bool {
+			return k.validateAcceptedAsset(ctx, c) == nil
+		},
+	)
+}