Merge pull request #13 from Unstoppable-DeFi/fix-140

fix-140: ensure user cannot intentionally create bad debt

contracts/margin-dex/Vault.vy

@@ -173,8 +173,7 @@ def open_position(
     assert self.is_whitelisted_dex[msg.sender], "unauthorized"
     assert self.is_enabled_market[_debt_token][_position_token], "market not enabled"
     assert self.margin[_account][_debt_token] >= _margin_amount, "not enough margin"
-    assert ((_debt_amount + _margin_amount) * PRECISION / _margin_amount) <= self.max_leverage[_debt_token][_position_token] * PRECISION, "too much leverage"
-    assert (self._available_liquidity(_debt_token) >= _debt_amount), "insufficient liquidity"
+    assert self._available_liquidity(_debt_token) >= _debt_amount, "insufficient liquidity"
 
     self.margin[_account][_debt_token] -= _margin_amount
     debt_shares: uint256 = self._borrow(_debt_token, _debt_amount)
@@ -205,6 +204,8 @@ def open_position(
     self.margin[_account][_debt_token] -= fee
     self._distribute_trading_fee(_debt_token, fee)
 
+    assert not self._is_liquidatable(position_uid), "cannot open liquidatable position"
+
     log PositionOpened(_account, position)
 
     return position_uid, amount_bought
@@ -227,6 +228,7 @@ event BadDebt:
 @external
 def close_position(_position_uid: bytes32, _min_amount_out: uint256) -> uint256:
     assert self.is_whitelisted_dex[msg.sender], "unauthorized"
+    assert _min_amount_out >= self._debt(_position_uid), "invalid min_amount_out"
     return self._close_position(_position_uid, _min_amount_out)
 
 
@@ -336,6 +338,8 @@ def reduce_position(
 
     self.positions[_position_uid] = position
 
+    assert not self._is_liquidatable(_position_uid), "cannot reduce into liquidation"
+
     log PositionReduced(position.account, _position_uid, position, amount_out_received)
 
     return amount_out_received

tests/vault/test_bad_debt.py

@@ -13,7 +13,7 @@ def setup(vault, mock_router, owner, weth, usdc):
 def open_position(vault, owner, weth, usdc):
     margin_amount = 15 * 10**6
     usdc_in = 150 * 10**6
-    min_weth_out = 123
+    min_weth_out = 1 * 10**18
 
     uid, amount_bought = vault.open_position(
         owner,  # account
@@ -28,22 +28,22 @@ def open_position(vault, owner, weth, usdc):
 
 
 def test_repay_bad_debt_001(vault, usdc, weth, owner):
-    """when bad-debt is repayd it should be reduced in the vault,
+    """when bad-debt is repaid it should be reduced in the vault,
     the available-liquidity should go up correspondentingly"""
     bad_debt_before = vault.bad_debt(usdc)
     position_uid, _ = open_position(vault, owner, weth, usdc)
     bad_debt_before = vault.bad_debt(usdc)
     assert bad_debt_before == 0
 
     vault.positions(position_uid)
-    vault.close_position(position_uid, 0)  # 0 out
+    vault.internal._close_position(position_uid, 1)  # 1 wei out
     bad_debt_after = vault.bad_debt(usdc)
 
-    assert bad_debt_after == 150 * 10**6
-    assert vault.available_liquidity(usdc) == 999700000000
+    assert bad_debt_after == 150 * 10**6 - 1
+    assert vault.available_liquidity(usdc) == 999700000002
 
-    vault.repay_bad_debt(usdc, 150 * 10**6)
+    vault.repay_bad_debt(usdc, bad_debt_after)
     bad_debt_after_repaying = vault.bad_debt(usdc)
     assert bad_debt_after_repaying == 0
 
-    assert vault.available_liquidity(usdc) == 999700000000 + 150 * 10**6
+    assert vault.available_liquidity(usdc) == 999700000002 + bad_debt_after 

tests/vault/test_close_position.py

@@ -12,9 +12,9 @@ def setup(vault, mock_router, owner, weth, usdc):
 
 
 def open_position(vault, owner, weth, usdc):
-    margin_amount = 15 * 10**6
-    usdc_in = 150 * 10**6
-    min_weth_out = 123
+    margin_amount = 150 * 10**6
+    usdc_in = 1500 * 10**6
+    min_weth_out = 3 * 10**18
 
     uid, amount_bought = vault.open_position(
         owner,  # account
@@ -42,7 +42,7 @@ def test_close_position_reduces_position_to_zero(vault, owner, weth, usdc):
 
     assert position_before[6] > 0  # [6] = postion_amount
 
-    vault.close_position(position_uid, 150 * 10**6)
+    vault.close_position(position_uid, 1500 * 10**6)
     position_after = vault.positions(position_uid)
 
     assert position_after[6] == 0  # [6] = position_amount
@@ -53,8 +53,8 @@ def test_close_position_swaps_liquidity_for_underlying(vault, weth, usdc, owner)
     liquidity_before = usdc.balanceOf(vault)
     underlying_before = weth.balanceOf(vault)
 
-    weth_in = 123
-    min_usdc_out = 150 * 10**6
+    weth_in = 3 * 10**18
+    min_usdc_out = 1500 * 10**6
     vault.close_position(position_uid, min_usdc_out)
 
     liquidity_after = usdc.balanceOf(vault)
@@ -71,16 +71,16 @@ def test_close_position_in_profit_increases_margin(vault, weth, usdc, owner):
 
     position = vault.positions(position_uid)
     position_margin = position[3]
-    assert position_margin == 15 * 10**6
+    assert position_margin == 150 * 10**6
 
     min_usdc_out = (
-        250 * 10**6
+        1750 * 10**6
     )  # simulated profit of 100 in addition to initial (margin + borrowed)
     vault.close_position(position_uid, min_usdc_out)
 
     margin_after = vault.margin(owner, usdc)
 
-    expected_pnl = 85 * 10**6
+    expected_pnl = 100 * 10**6
     assert (
         margin_after == account_margin_after_trade_open + position_margin + expected_pnl
     )
@@ -93,9 +93,9 @@ def test_close_position_in_loss_reduces_margin(vault, usdc, weth, owner):
     position = vault.positions(position_uid)
     position_margin = position[3]
 
-    # position-supply = debt + margin = 150 + 15
+    # position-supply = debt + margin = 1500 + 150
     expected_loss = 10 * 10**6
-    min_usdc_out = 165 * 10**6 - expected_loss  # simulated loss of 10
+    min_usdc_out = 1650 * 10**6 - expected_loss  # simulated loss of 10
     vault.close_position(position_uid, min_usdc_out)
 
     margin_after = vault.margin(owner, usdc)
@@ -144,24 +144,25 @@ def test_close_position_in_bad_debt_records_bad_debt(vault, usdc, weth, owner):
     assert bad_debt_before == 0
 
     vault.positions(position_uid)
-    vault.close_position(position_uid, 0)  # 0 out
+    vault.internal._close_position(position_uid, 1)  # 1 wei out
     bad_debt_after = vault.bad_debt(usdc)
 
     # TODO ensure position-debt is here the correct value
     # we are minting new bad-debt shares and it is the first
     # position, thus all share-positions should now be bad-debt
-    # that means all the 150 that where borrowed are now bad debt
-    assert bad_debt_after == 150 * 10**6
+    # that means all the 1500 that where borrowed are now bad debt
+    assert bad_debt_after == 1500 * 10**6 - 1
 
 
 def test_close_position_in_bad_debt_deactivates_accepting_new_orders(
     vault, usdc, weth, owner
 ):
     position_uid, _ = open_position(vault, owner, weth, usdc)
     assert vault.is_accepting_new_orders()
+    assert vault.acceptable_amount_of_bad_debt(usdc) == 0
     vault.positions(position_uid)
 
-    vault.close_position(position_uid, 0)  # 0 out
+    vault.internal._close_position(position_uid, 1)  # 0 out
 
     bad_debt_after = vault.bad_debt(usdc)
 

tests/vault/test_open_position.py

@@ -139,9 +139,9 @@ def test_open_trade_swaps_liquidity_for_underlying(vault, owner, weth, usdc):
     liquidity_before = usdc.balanceOf(vault)
     underlying_before = weth.balanceOf(vault)
 
-    margin_amount = 15 * 10**6
-    min_borrow_amount = 150 * 10**6
-    min_position_amount = 123
+    margin_amount = 150 * 10**6
+    min_borrow_amount = 1500 * 10**6
+    min_position_amount = 3 * 10**18
     vault.open_position(
         owner, weth, min_position_amount, usdc, min_borrow_amount, margin_amount
     )
@@ -156,9 +156,9 @@ def test_open_trade_swaps_liquidity_for_underlying(vault, owner, weth, usdc):
 def test_open_trade_reduces_free_margin_correctly(vault, owner, usdc, weth, alice):
     margin_before = vault.margin(owner, usdc)
 
-    margin_amount = 15 * 10**6
-    min_borrow_amount = 150 * 10**6
-    min_position_amount = 123
+    margin_amount = 150 * 10**6
+    min_borrow_amount = 1500 * 10**6
+    min_position_amount = 3 * 10**18
     vault.open_position(
         owner, weth, min_position_amount, usdc, min_borrow_amount, margin_amount
     )
@@ -172,9 +172,9 @@ def test_open_trade_reduces_free_margin_correctly(vault, owner, usdc, weth, alic
 def test_open_position_records_amount_lent_out_correctly(vault, owner, usdc, weth):
     debt_before = vault.total_debt_amount(usdc)
 
-    margin_amount = 15 * 10**6
-    min_borrow_amount = 150 * 10**6
-    min_position_amount = 123
+    margin_amount = 150 * 10**6
+    min_borrow_amount = 1500 * 10**6
+    min_position_amount = 3 * 10**18
     vault.open_position(
         owner, weth, min_position_amount, usdc, min_borrow_amount, margin_amount
     )
@@ -204,7 +204,7 @@ def test_cannot_open_trade_with_higher_than_max_leverage(vault, owner, weth, usd
     min_borrow_amount = margin_amount * max_leverage + 1
     min_position_amount = 123
 
-    with boa.reverts("too much leverage"):
+    with boa.reverts("cannot open liquidatable position"):
         vault.open_position(
             owner, weth, min_position_amount, usdc, min_borrow_amount, margin_amount
         )