Merge pull request #322 from morpho-labs/feat/add-argument-liquidate

Add repaidShares argument to liquidate function

src/Morpho.sol

@@ -326,13 +326,16 @@ contract Morpho is IMorpho {
     /* LIQUIDATION */
 
     /// @inheritdoc IMorpho
-    function liquidate(MarketParams memory marketParams, address borrower, uint256 seized, bytes calldata data)
-        external
-        returns (uint256 assetsRepaid, uint256 sharesRepaid)
-    {
+    function liquidate(
+        MarketParams memory marketParams,
+        address borrower,
+        uint256 seizedAssets,
+        uint256 repaidShares,
+        bytes calldata data
+    ) external returns (uint256, uint256) {
         Id id = marketParams.id();
         require(market[id].lastUpdate != 0, ErrorsLib.MARKET_NOT_CREATED);
-        require(seized != 0, ErrorsLib.ZERO_ASSETS);
+        require(UtilsLib.exactlyOneZero(seizedAssets, repaidShares), ErrorsLib.INCONSISTENT_INPUT);
 
         _accrueInterest(marketParams, id);
 
@@ -344,14 +347,21 @@ contract Morpho is IMorpho {
         uint256 incentiveFactor = UtilsLib.min(
             MAX_LIQUIDATION_INCENTIVE_FACTOR, WAD.wDivDown(WAD - LIQUIDATION_CURSOR.wMulDown(WAD - marketParams.lltv))
         );
-        assetsRepaid = seized.mulDivUp(collateralPrice, ORACLE_PRICE_SCALE).wDivUp(incentiveFactor);
-        sharesRepaid = assetsRepaid.toSharesDown(market[id].totalBorrowAssets, market[id].totalBorrowShares);
 
-        user[id][borrower].borrowShares -= sharesRepaid.toUint128();
-        market[id].totalBorrowShares -= sharesRepaid.toUint128();
-        market[id].totalBorrowAssets -= assetsRepaid.toUint128();
+        uint256 repaidAssets;
+        if (seizedAssets > 0) {
+            repaidAssets = seizedAssets.mulDivUp(collateralPrice, ORACLE_PRICE_SCALE).wDivUp(incentiveFactor);
+            repaidShares = repaidAssets.toSharesDown(market[id].totalBorrowAssets, market[id].totalBorrowShares);
+        } else {
+            repaidAssets = repaidShares.toAssetsUp(market[id].totalBorrowAssets, market[id].totalBorrowShares);
+            seizedAssets = repaidAssets.wMulDown(incentiveFactor).mulDivDown(ORACLE_PRICE_SCALE, collateralPrice);
+        }
+
+        user[id][borrower].borrowShares -= repaidShares.toUint128();
+        market[id].totalBorrowShares -= repaidShares.toUint128();
+        market[id].totalBorrowAssets -= repaidAssets.toUint128();
 
-        user[id][borrower].collateral -= seized.toUint128();
+        user[id][borrower].collateral -= seizedAssets.toUint128();
 
         // Realize the bad debt if needed. Note that it saves ~3k gas to do it.
         uint256 badDebtShares;
@@ -364,13 +374,15 @@ contract Morpho is IMorpho {
             user[id][borrower].borrowShares = 0;
         }
 
-        IERC20(marketParams.collateralToken).safeTransfer(msg.sender, seized);
+        IERC20(marketParams.collateralToken).safeTransfer(msg.sender, seizedAssets);
+
+        emit EventsLib.Liquidate(id, msg.sender, borrower, repaidAssets, repaidShares, seizedAssets, badDebtShares);
 
-        emit EventsLib.Liquidate(id, msg.sender, borrower, assetsRepaid, sharesRepaid, seized, badDebtShares);
+        if (data.length > 0) IMorphoLiquidateCallback(msg.sender).onMorphoLiquidate(repaidAssets, data);
 
-        if (data.length > 0) IMorphoLiquidateCallback(msg.sender).onMorphoLiquidate(assetsRepaid, data);
+        IERC20(marketParams.borrowableToken).safeTransferFrom(msg.sender, address(this), repaidAssets);
 
-        IERC20(marketParams.borrowableToken).safeTransferFrom(msg.sender, address(this), assetsRepaid);
+        return (seizedAssets, repaidAssets);
     }
 
     /* FLASH LOANS */

src/interfaces/IMorpho.sol

@@ -216,19 +216,26 @@ interface IMorpho {
     function withdrawCollateral(MarketParams memory marketParams, uint256 assets, address onBehalf, address receiver)
         external;
 
-    /// @notice Liquidates `seized` of collateral of `borrower`'s position, optionally calling back the caller's
-    /// `onMorphoLiquidate` function with the given `data`.
+    /// @notice Liquidates the given `repaidShares` of debt asset or seize the given `seized` of collateral on the given
+    /// `market` of the given `borrower`'s position, optionally calling back the caller's `onMorphoLiquidate` function
+    /// with the given `data`.
+    /// @dev Either `seized` or `repaidShares` should be zero.
     /// @dev Seizing more than the collateral balance will underflow and revert without any error message.
     /// @dev Repaying more than the borrow balance will underflow and revert without any error message.
     /// @param marketParams The market of the position.
     /// @param borrower The owner of the position.
-    /// @param seized The amount of collateral to seize.
+    /// @param seizedAssets The amount of collateral to seize.
+    /// @param repaidShares The amount of shares to repay.
     /// @param data Arbitrary data to pass to the `onMorphoLiquidate` callback. Pass empty data if not needed.
-    /// @return assetsRepaid The amount of assets repaid.
-    /// @return sharesRepaid The amount of shares burned.
-    function liquidate(MarketParams memory marketParams, address borrower, uint256 seized, bytes memory data)
-        external
-        returns (uint256 assetsRepaid, uint256 sharesRepaid);
+    /// @return The amount of assets seized.
+    /// @return The amount of assets repaid.
+    function liquidate(
+        MarketParams memory marketParams,
+        address borrower,
+        uint256 seizedAssets,
+        uint256 repaidShares,
+        bytes memory data
+    ) external returns (uint256, uint256);
 
     /// @notice Executes a flash loan.
     /// @param token The token to flash loan.

test/forge/BaseTest.sol

@@ -24,7 +24,7 @@ contract BaseTest is Test {
     uint256 internal constant MAX_TEST_AMOUNT = 1e28;
     uint256 internal constant MIN_TEST_SHARES = MIN_TEST_AMOUNT * SharesMathLib.VIRTUAL_SHARES;
     uint256 internal constant MAX_TEST_SHARES = MAX_TEST_AMOUNT * SharesMathLib.VIRTUAL_SHARES;
-    uint256 internal constant MIN_COLLATERAL_PRICE = 1000;
+    uint256 internal constant MIN_COLLATERAL_PRICE = 1e10;
     uint256 internal constant MAX_COLLATERAL_PRICE = 1e40;
     uint256 internal constant MAX_COLLATERAL_ASSETS = type(uint128).max;
 

test/forge/integration/TestIntegrationCallbacks.t.sol

@@ -166,9 +166,9 @@ contract IntegrationCallbacksTest is
         borrowableToken.approve(address(morpho), 0);
 
         vm.expectRevert();
-        morpho.liquidate(marketParams, address(this), collateralAmount, hex"");
+        morpho.liquidate(marketParams, address(this), collateralAmount, 0, hex"");
         morpho.liquidate(
-            marketParams, address(this), collateralAmount, abi.encode(this.testLiquidateCallback.selector, hex"")
+            marketParams, address(this), collateralAmount, 0, abi.encode(this.testLiquidateCallback.selector, hex"")
         );
     }
 

test/forge/integration/TestIntegrationLiquidate.t.sol

@@ -12,14 +12,24 @@ contract IntegrationLiquidateTest is BaseTest {
         vm.assume(neq(marketParamsFuzz, marketParams));
 
         vm.expectRevert(bytes(ErrorsLib.MARKET_NOT_CREATED));
-        morpho.liquidate(marketParamsFuzz, address(this), 1, hex"");
+        morpho.liquidate(marketParamsFuzz, address(this), 1, 0, hex"");
     }
 
     function testLiquidateZeroAmount() public {
         vm.prank(BORROWER);
 
-        vm.expectRevert(bytes(ErrorsLib.ZERO_ASSETS));
-        morpho.liquidate(marketParams, address(this), 0, hex"");
+        vm.expectRevert(bytes(ErrorsLib.INCONSISTENT_INPUT));
+        morpho.liquidate(marketParams, address(this), 0, 0, hex"");
+    }
+
+    function testLiquidateInconsistentInput(uint256 seized, uint256 sharesRepaid) public {
+        seized = bound(seized, 1, MAX_TEST_AMOUNT);
+        sharesRepaid = bound(sharesRepaid, 1, MAX_TEST_SHARES);
+
+        vm.prank(BORROWER);
+
+        vm.expectRevert(bytes(ErrorsLib.INCONSISTENT_INPUT));
+        morpho.liquidate(marketParams, address(this), seized, sharesRepaid, hex"");
     }
 
     function testLiquidateHealthyPosition(
@@ -49,10 +59,10 @@ contract IntegrationLiquidateTest is BaseTest {
 
         vm.prank(LIQUIDATOR);
         vm.expectRevert(bytes(ErrorsLib.HEALTHY_POSITION));
-        morpho.liquidate(marketParams, BORROWER, amountSeized, hex"");
+        morpho.liquidate(marketParams, BORROWER, amountSeized, 0, hex"");
     }
 
-    function testLiquidateNoBadDebt(
+    function testLiquidateSeizedInputNoBadDebt(
         uint256 amountCollateral,
         uint256 amountSupplied,
         uint256 amountBorrowed,
@@ -91,13 +101,12 @@ contract IntegrationLiquidateTest is BaseTest {
 
         vm.expectEmit(true, true, true, true, address(morpho));
         emit EventsLib.Liquidate(id, LIQUIDATOR, BORROWER, expectedRepaid, expectedRepaidShares, amountSeized, 0);
-        (uint256 returnRepaid, uint256 returnRepaidShares) =
-            morpho.liquidate(marketParams, BORROWER, amountSeized, hex"");
+        (uint256 returnSeized, uint256 returnRepaid) = morpho.liquidate(marketParams, BORROWER, amountSeized, 0, hex"");
 
         uint256 expectedBorrowShares = amountBorrowed.toSharesUp(0, 0) - expectedRepaidShares;
 
+        assertEq(returnSeized, amountSeized, "returned seized amount");
         assertEq(returnRepaid, expectedRepaid, "returned asset amount");
-        assertEq(returnRepaidShares, expectedRepaidShares, "returned shares amount");
         assertEq(morpho.borrowShares(id, BORROWER), expectedBorrowShares, "borrow shares");
         assertEq(morpho.totalBorrowAssets(id), amountBorrowed - expectedRepaid, "total borrow");
         assertEq(morpho.totalBorrowShares(id), expectedBorrowShares, "total borrow shares");
@@ -115,6 +124,71 @@ contract IntegrationLiquidateTest is BaseTest {
         assertEq(collateralToken.balanceOf(LIQUIDATOR), amountSeized, "liquidator collateral balance");
     }
 
+    function testLiquidateSharesInputNoBadDebt(
+        uint256 amountCollateral,
+        uint256 amountSupplied,
+        uint256 amountBorrowed,
+        uint256 sharesRepaid,
+        uint256 priceCollateral
+    ) public {
+        (amountCollateral, amountBorrowed, priceCollateral) =
+            _boundUnhealthyPosition(amountCollateral, amountBorrowed, priceCollateral);
+
+        vm.assume(amountCollateral > 1);
+
+        amountSupplied = bound(amountSupplied, amountBorrowed, MAX_TEST_AMOUNT);
+        _supply(amountSupplied);
+
+        uint256 expectedBorrowShares = amountBorrowed.toSharesUp(0, 0);
+        uint256 maxRepaidShares = amountCollateral.mulDivDown(priceCollateral, ORACLE_PRICE_SCALE).wDivDown(
+            _liquidationIncentive(marketParams.lltv)
+        );
+        vm.assume(maxRepaidShares != 0);
+        sharesRepaid = bound(sharesRepaid, 1, min(maxRepaidShares, expectedBorrowShares));
+        uint256 expectedRepaid = sharesRepaid.toAssetsUp(amountBorrowed, expectedBorrowShares);
+        uint256 expectedSeized = expectedRepaid.wMulDown(_liquidationIncentive(marketParams.lltv)).mulDivDown(
+            ORACLE_PRICE_SCALE, priceCollateral
+        );
+
+        borrowableToken.setBalance(LIQUIDATOR, amountBorrowed);
+        collateralToken.setBalance(BORROWER, amountCollateral);
+
+        oracle.setPrice(type(uint256).max / amountCollateral);
+
+        vm.startPrank(BORROWER);
+        morpho.supplyCollateral(marketParams, amountCollateral, BORROWER, hex"");
+        morpho.borrow(marketParams, amountBorrowed, 0, BORROWER, BORROWER);
+        vm.stopPrank();
+
+        oracle.setPrice(priceCollateral);
+
+        vm.prank(LIQUIDATOR);
+
+        vm.expectEmit(true, true, true, true, address(morpho));
+        emit EventsLib.Liquidate(id, LIQUIDATOR, BORROWER, expectedRepaid, sharesRepaid, expectedSeized, 0);
+        (uint256 returnSeized, uint256 returnRepaid) = morpho.liquidate(marketParams, BORROWER, 0, sharesRepaid, hex"");
+
+        expectedBorrowShares = amountBorrowed.toSharesUp(0, 0) - sharesRepaid;
+
+        assertEq(returnSeized, expectedSeized, "returned seized amount");
+        assertEq(returnRepaid, expectedRepaid, "returned asset amount");
+        assertEq(morpho.borrowShares(id, BORROWER), expectedBorrowShares, "borrow shares");
+        assertEq(morpho.totalBorrowAssets(id), amountBorrowed - expectedRepaid, "total borrow");
+        assertEq(morpho.totalBorrowShares(id), expectedBorrowShares, "total borrow shares");
+        assertEq(morpho.collateral(id, BORROWER), amountCollateral - expectedSeized, "collateral");
+        assertEq(borrowableToken.balanceOf(BORROWER), amountBorrowed, "borrower balance");
+        assertEq(borrowableToken.balanceOf(LIQUIDATOR), amountBorrowed - expectedRepaid, "liquidator balance");
+        assertEq(
+            borrowableToken.balanceOf(address(morpho)),
+            amountSupplied - amountBorrowed + expectedRepaid,
+            "morpho balance"
+        );
+        assertEq(
+            collateralToken.balanceOf(address(morpho)), amountCollateral - expectedSeized, "morpho collateral balance"
+        );
+        assertEq(collateralToken.balanceOf(LIQUIDATOR), expectedSeized, "liquidator collateral balance");
+    }
+
     struct LiquidateBadDebtTestParams {
         uint256 incentive;
         uint256 expectedRepaid;
@@ -183,11 +257,11 @@ contract IntegrationLiquidateTest is BaseTest {
             amountCollateral,
             params.expectedBadDebt * SharesMathLib.VIRTUAL_SHARES
         );
-        (uint256 returnRepaid, uint256 returnRepaidShares) =
-            morpho.liquidate(marketParams, BORROWER, amountCollateral, hex"");
+        (uint256 returnSeized, uint256 returnRepaid) =
+            morpho.liquidate(marketParams, BORROWER, amountCollateral, 0, hex"");
 
+        assertEq(returnSeized, amountCollateral, "returned seized amount");
         assertEq(returnRepaid, params.expectedRepaid, "returned asset amount");
-        assertEq(returnRepaidShares, params.expectedRepaidShares, "returned shares amount");
         assertEq(morpho.collateral(id, BORROWER), 0, "collateral");
         assertEq(borrowableToken.balanceOf(BORROWER), amountBorrowed, "borrower balance");
         assertEq(borrowableToken.balanceOf(LIQUIDATOR), amountBorrowed - params.expectedRepaid, "liquidator balance");

test/forge/invariant/TestInvariantSingleMarketChangingPrice.t.sol

@@ -247,7 +247,7 @@ contract SingleMarketChangingPriceInvariantTest is InvariantBaseTest {
         borrowableToken.setBalance(msg.sender, repaid);
 
         vm.prank(msg.sender);
-        morpho.liquidate(marketParams, user, seized, hex"");
+        morpho.liquidate(marketParams, user, seized, 0, hex"");
     }
 
     function invariantSupplyShares() public {

test/hardhat/Morpho.spec.ts

@@ -165,7 +165,7 @@ describe("Morpho", () => {
 
       const seized = closePositions ? assets : assets.div(2);
 
-      await morpho.connect(liquidator).liquidate(marketParams, borrower.address, seized, "0x");
+      await morpho.connect(liquidator).liquidate(marketParams, borrower.address, seized, 0, "0x");
 
       const remainingCollateral = (await morpho.user(id, borrower.address)).collateral;
 

test/morpho_tests.tree

@@ -202,35 +202,38 @@
                     └── when position is not healthy
                         └── revert with INSUFFICIENT_COLLATERAL
 .
-└── liquidate(MarketParams memory marketParams, address borrower, uint256 seized, bytes calldata data) external
+└── liquidate(MarketParams memory marketParams, address borrower, uint256 seizedAssets, uint256 repaidShares, bytes calldata data) external
     ├── when market is not created
     │   └── revert with MARKET_NOT_CREATED
     └── when market is created
-        ├── when the assets to seized is zero
-        │   └── revert with ZERO_ASSETS
-        └── when the assets to seized is not zero
-            ├── it should accrue the interest
+        ├── when both seizedAssets and repaidShares are null or both seizedAssets and repaidShares are not null
+        │   └─  revert with INCONSISTENT_INPUT
+        └── when one of seizedAssets or repaidShares is null and one of seizedAssets or repaidShares is not null
+            ├── it should accrue the interests
             ├── when position is healthy
             │   └── revert with HEALTHY_POSITION
             └── when the position is not healthy
-                ├── it should compute repaid = seized.mulDivUp(collateralPrice, ORACLE_PRICE_SCALE).wDivUp(incentive)
-                ├── it should compute repaidShares = repaid.toSharesDown(totalBorrowAssets[marketParams.id], totalBorrowShares[marketParams.id]);
-                ├── it should remove repaidShares from borrowShares[market.id][borrower]
+                ├── when seizedAssets is not zero
+                │    ├── it should compute assetsRepaid = seizedAssets.mulDivUp(collateralPrice, ORACLE_PRICE_SCALE).wDivUp(liquidationIncentiveFactor(marketParams.lltv))
+                │    └── it should compute repaidShares = assetsRepaid.toSharesDown(totalBorrow[marketParams.id], totalBorrowShares[market.id])
+                ├── when repaidShares is not zero
+                │    ├── it should compute assetsRepaid = repaidShares.toAssetsUp(totalBorrow[marketParams.id], totalBorrowShares[marketParams.id])
+                │    └── it should compute seizedAssets = assetsRepaid.wMulDown(incentiveFactor).mulDivDown(ORACLE_PRICE_SCALE, collateralPrice)
                 ├── it should remove repaidShares from totalBorrowShares[marketParams.id]
-                ├── it should remove repaid from totalBorrowAssets[marketParams.id]
-                ├── it should remove seized from collateral[marketParams.id][borrower]
+                ├── it should remove assetsRepaid from totalBorrow[marketParams.id]
+                ├── it should remove repaidShares from collateral[marketParams.id][borrower]
                 ├── if after the liquidation the borrower's collateral is 0
                 │   └── it should realize bad debt
-                │       ├── it should compute badDebt = borrowShares[marketParams.id][borrower].toAssetsUp(totalBorrowAssets[marketParams.id], totalBorrowShares[marketParams.id])
+                │       ├── it should compute badDebt = borrowShares[marketParams.id][borrower].toAssetsUp(totalBorrow[marketParams.id], totalBorrowShares[marketParams.id])
                 │       ├── it should remove badDebt from totalSupplyAssets[marketParams.id]
                 │       ├── it should remove badDebt from totalBorrowAssets[marketParams.id]
                 │       ├── it should remove borrowShares[marketParams.id][borrower] from totalBorrowShares[marketParams.id]
                 │       └── it should set borrowShares[marketParams.id][borrower] to 0
-                ├── it should transfer seized of collateral asset to the sender
-                ├── it should emit Liquidate(marketParams.id, msg.sender, borrower, repaid, repaidShares, seized, badDebtShares)
+                ├── it should transfer repaidShares of collateral asset to the sender
+                ├── it should emit Liquidate(marketParams.id, msg.sender, borrower, assetsRepaid, repaidShares, seizedAssets, badDebtShares)
                 ├── if data.length > 0
                 │   └── it should call sender's onMorphoLiquidate callback
-                └── it should transfer repaid of borrowable asset from the sender the Morpho
+                └── it should transfer assetsRepaid of borrowable asset from the sender to Morpho
 .
 └── flashLoan(address token, uint256 assets, bytes calldata data) external
     ├── it should transfer assets of token from Morpho to the sender