fix leveraged liquidate not working during low liquidity (#2285)

* fix leveraged liquidate not working during low liquidity * cl * empty commit * empty commit * ++ * fix govulncheck flow name * ++ --------- Co-authored-by: Robert Zaremba <[email protected]>
umee-network · Oct 17, 2023 · 273efb4 · 273efb4
1 parent 39e19f6
commit 273efb4
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Showing 4 changed files with 22 additions and 6 deletions.
diff --git a/.github/workflows/govulncheck.yml b/.github/workflows/govulncheck.yml
@@ -1,4 +1,4 @@
-name: Tests
+name: Vuln
 on:
   pull_request:
     types: [opened, synchronize, reopened, labeled]

diff --git a/CHANGELOG.md b/CHANGELOG.md
@@ -75,6 +75,7 @@ Ref: https://keepachangelog.com/en/1.0.0/
 - [2267](https://github.com/umee-network/umee/pull/2267) Leverage transactions accept spot prices up to 3 minutes old, and leverage queries use most recent spot price when required.
 - [2263](https://github.com/umee-network/umee/pull/2263) Add spot price fields to account summary.
 - [2270](https://github.com/umee-network/umee/pull/2270) Increase free oracle tx limit to 200k gas.
+- [2285](https://github.com/umee-network/umee/pull/2285) Leveraged liquidate works during low liquidity.
 
 ### Features
 

diff --git a/x/leverage/keeper/liquidate.go b/x/leverage/keeper/liquidate.go
@@ -108,6 +108,7 @@ func (k Keeper) getLiquidationAmounts(
 		priceRatio,
 		exchangeRate,
 		liqudationIncentive,
+		leveragedLiquidate,
 	)
 
 	return sdk.NewCoin(repayDenom, repay), sdk.NewCoin(collateralDenom, burn), sdk.NewCoin(rewardDenom, reward), nil
@@ -123,13 +124,15 @@ func (k Keeper) getLiquidationAmounts(
 // - priceRatio: The ratio of repayPrice / rewardPrice, which is used when computing rewards
 // - uTokenExchangeRate: The uToken exchange rate from collateral uToken denom to reward base denom
 // - liquidationIncentive: The liquidation incentive of the token reward denomination
+// - leverageLiquidate: whether liquidation is leveraged (in which case it can disregard availableReward)
 func ComputeLiquidation(
 	availableRepay,
 	availableCollateral,
 	availableReward sdkmath.Int,
 	priceRatio,
 	uTokenExchangeRate,
 	liquidationIncentive sdk.Dec,
+	leverageLiquidate bool,
 ) (tokenRepay sdkmath.Int, collateralBurn sdkmath.Int, tokenReward sdkmath.Int) {
 	// Prevent division by zero
 	if uTokenExchangeRate.IsZero() || priceRatio.IsZero() {
@@ -157,12 +160,15 @@ func ComputeLiquidation(
 	ratio = sdk.MinDec(ratio,
 		toDec(availableCollateral).Quo(maxCollateral),
 	)
-	// Base token reward cannot exceed available unreserved module balance
-	ratio = sdk.MinDec(ratio,
-		toDec(availableReward).Quo(maxReward),
-	)
+	if !leverageLiquidate {
+		// Base token reward cannot exceed available unreserved module balance
+		ratio = sdk.MinDec(ratio,
+			toDec(availableReward).Quo(maxReward),
+		)
+	}
+
 	// Catch edge cases
-	if !ratio.IsPositive() {
+	if !ratio.IsPositive() || ratio.GT(sdk.OneDec()) {
 		return sdk.ZeroInt(), sdk.ZeroInt(), sdk.ZeroInt()
 	}
 

diff --git a/x/leverage/keeper/liquidate_test.go b/x/leverage/keeper/liquidate_test.go
@@ -19,6 +19,7 @@ func TestComputeLiquidation(t *testing.T) {
 		rewardTokenPrice     sdk.Dec
 		uTokenExchangeRate   sdk.Dec
 		liquidationIncentive sdk.Dec
+		leveragedLiquidate   bool
 	}
 
 	baseCase := func() testCase {
@@ -30,6 +31,7 @@ func TestComputeLiquidation(t *testing.T) {
 			sdk.OneDec(),                 // price(B) = $1
 			sdk.OneDec(),                 // utoken exchange rate 1 u/B => 1 B
 			sdk.MustNewDecFromStr("0.1"), // reward value is 110% repay value
+			false,
 		}
 	}
 
@@ -42,6 +44,7 @@ func TestComputeLiquidation(t *testing.T) {
 			priceRatio,
 			tc.uTokenExchangeRate,
 			tc.liquidationIncentive,
+			tc.leveragedLiquidate,
 		)
 
 		assert.Equal(t, true, sdkmath.NewInt(expectedRepay).Equal(repay),
@@ -74,6 +77,12 @@ func TestComputeLiquidation(t *testing.T) {
 	rewardLimited.availableReward = sdk.NewInt(330)
 	runTestCase(rewardLimited, 300, 330, 330, "reward limited")
 
+	// limiting factor would be available reward, but leveraged liquidation is not limited by base tokens
+	rewardNotLimited := baseCase()
+	rewardNotLimited.availableReward = sdk.NewInt(330)
+	rewardNotLimited.leveragedLiquidate = true
+	runTestCase(rewardNotLimited, 1000, 1100, 1100, "reward not limited")
+
 	// repay token is worth more
 	expensiveRepay := baseCase()
 	expensiveRepay.repayTokenPrice = sdk.MustNewDecFromStr("2")