From 639f2320935f69911e7a25b87f0022a2bee43c02 Mon Sep 17 00:00:00 2001
From: Taylor Brent <taylor.w.brent@gmail.com>
Date: Tue, 2 Apr 2024 11:14:41 -0400
Subject: [PATCH] Require new collateral is sound when normalizing weights of a
 new basket (#1105)

---
 contracts/p0/BasketHandler.sol    |  1 +
 contracts/p1/mixins/BasketLib.sol |  1 +
 test/Main.test.ts                 | 29 ++++++++++++++++++++++++++---
 3 files changed, 28 insertions(+), 3 deletions(-)

diff --git a/contracts/p0/BasketHandler.sol b/contracts/p0/BasketHandler.sol
index 30a8f64d84..165c86ca9c 100644
--- a/contracts/p0/BasketHandler.sol
+++ b/contracts/p0/BasketHandler.sol
@@ -855,6 +855,7 @@ contract BasketHandlerP0 is ComponentP0, IBasketHandler {
         uint192 newP; // {UoA/BU}
         for (uint256 i = 0; i < len; ++i) {
             ICollateral coll = main.assetRegistry().toColl(erc20s[i]); // reverts if unregistered
+            require(coll.status() == CollateralStatus.SOUND, "unsound new collateral");
 
             (low, high) = coll.price(); // {UoA/tok}
             require(low > 0 && high < FIX_MAX, "invalid price");
diff --git a/contracts/p1/mixins/BasketLib.sol b/contracts/p1/mixins/BasketLib.sol
index 216935c2b9..80244c0567 100644
--- a/contracts/p1/mixins/BasketLib.sol
+++ b/contracts/p1/mixins/BasketLib.sol
@@ -361,6 +361,7 @@ library BasketLibP1 {
         uint192 newPrice; // {UoA/BU}
         for (uint256 i = 0; i < len; ++i) {
             ICollateral coll = assetRegistry.toColl(erc20s[i]); // reverts if unregistered
+            require(coll.status() == CollateralStatus.SOUND, "unsound new collateral");
 
             (uint192 low, uint192 high) = coll.price(); // {UoA/tok}
             require(low > 0 && high < FIX_MAX, "invalid price");
diff --git a/test/Main.test.ts b/test/Main.test.ts
index 053ffa7553..d316337d31 100644
--- a/test/Main.test.ts
+++ b/test/Main.test.ts
@@ -2136,11 +2136,10 @@ describe(`MainP${IMPLEMENTATION} contract`, () => {
       ).to.be.revertedWith('new target weights')
     })
 
-    it('Should normalize price by USD for index RTokens', async () => {
-      // Basket starts out worth $1 and holding USD targets
+    it('Should normalize by price for index RTokens', async () => {
       // Throughout this test the $ value of the RToken should remain
 
-      // Group the 4 USD tokens together
+      // Set initial basket
       await indexBH.connect(owner).setPrimeBasket([token0.address], [fp('1')])
       await indexBH.connect(owner).refreshBasket()
       let [erc20s, tokAmts] = await indexBH.quote(fp('1'), 0)
@@ -2195,6 +2194,30 @@ describe(`MainP${IMPLEMENTATION} contract`, () => {
       expect(tokAmts[1]).to.equal(fp('0.5'))
     })
 
+    it('Should not normalize by price when the current basket is unsound', async () => {
+      await indexBH.connect(owner).setPrimeBasket([token0.address], [fp('1')])
+      await indexBH.connect(owner).refreshBasket()
+      await setOraclePrice(collateral0.address, fp('0.5'))
+      await assetRegistry.refresh()
+      expect(await collateral0.status()).to.equal(CollateralStatus.IFFY)
+      expect(await collateral1.status()).to.equal(CollateralStatus.SOUND)
+      await expect(
+        indexBH.connect(owner).setPrimeBasket([token1.address], [fp('1')])
+      ).to.be.revertedWith('unsound basket')
+    })
+
+    it('Should not normalize by price if the new collateral is unsound', async () => {
+      await indexBH.connect(owner).setPrimeBasket([token0.address], [fp('1')])
+      await indexBH.connect(owner).refreshBasket()
+      await setOraclePrice(collateral1.address, fp('0.5'))
+      await assetRegistry.refresh()
+      expect(await collateral0.status()).to.equal(CollateralStatus.SOUND)
+      expect(await collateral1.status()).to.equal(CollateralStatus.IFFY)
+      await expect(
+        indexBH.connect(owner).setPrimeBasket([token1.address], [fp('1')])
+      ).to.be.revertedWith('unsound new collateral')
+    })
+
     describe('Custom Redemption', () => {
       const issueAmount = fp('10000')
       let usdcChainlink: MockV3Aggregator