Feat: liquidation cap and grace period timelock in recovery mode by jasm1n33 · Pull Request #6 · Satoshi-Protocol/satoshi-v2

jasm1n33 · 2025-03-14T05:30:33Z

Liquidation collateral amount would cap with 1.1 * debt in recovery mode.
After getting into the recovery mode, a grace period is applied.
Any position with MCR < ICR < CCR cannot be liquidated in grace period.

StillFantastic

Also need to update the grace period timestamp if necessary after the following operations:

Liquidation
Redemption
Closing trove

StillFantastic · 2025-04-08T23:10:44Z

src/core/facets/LiquidationFacet.sol

+                singleLiquidation = _tryLiquidateWithCap(
+                    troveManager, account, debtInStabPool, troveManagerValues.MCR, troveManagerValues.price
+                );


If the intention is to cap the liquidation reward to 10%, then I think 110% should be used here instead of MCR.

_tryLiquidateWithCap only liquidates a trove when SP can cover the debt (no redistribution). Consider if it is the expected behavior.

StillFantastic · 2025-04-09T02:02:45Z

src/core/facets/LiquidationFacet.sol


                uint256 TCR = SatoshiMath._computeCR(entireSystemColl, entireSystemDebt);
                if (TCR >= Config.CCR || ICR >= TCR) break;
+                _checkRecoveryModeGracePeriod();


_checkRecoveryModeGracePeriod should not throw an error here.

StillFantastic · 2025-04-09T02:04:53Z

src/core/facets/LiquidationFacet.sol

                debtInStabPool -= singleLiquidation.debtToOffset;
+            } else if (ICR < troveManagerValues.MCR) {
+                singleLiquidation = _tryLiquidateWithCap(
+                    troveManager, account, debtInStabPool, troveManagerValues.MCR, troveManagerValues.price


MCR -> 110%

StillFantastic · 2025-04-09T02:14:31Z

src/core/facets/LiquidationFacet.sol

                    uint256 TCR = SatoshiMath._computeCR(entireSystemColl, entireSystemDebt);
                    if (TCR >= Config.CCR || ICR >= TCR) continue;
+                    // check the recovery mode grace period
+                    _checkRecoveryModeGracePeriod();


Should not throw.

StillFantastic · 2025-04-09T02:42:13Z

src/core/Initializer.sol

+        s.lastGracePeriodStartTimestamp = Config.UNSET_TIMESTAMP;
+        s.recoveryModeGracePeriodDuration = Config.MINIMUM_GRACE_PERIOD;


Besides this, I suggest adding another initialization function dedicated to these two variables. Otherwise, the state could be problematic after upgrading, e.g., unable to start a grace period countdown if already in recovery mode.

I'm thinking about adding an initv2 with a reinitializer modifier. Also have to make sure to to call initv2 inside the original init as well so that it becomes compatible for new chain deployment.

StillFantastic · 2025-04-09T18:50:45Z

src/core/facets/LiquidationFacet.sol

+                _checkRecoveryModeGracePeriod();

                singleLiquidation = _tryLiquidateWithCap(
                    _troveManager, account, debtInStabPool, troveManagerValues.MCR, troveManagerValues.price


MCR -> 110%

StillFantastic · 2025-04-09T18:51:01Z

src/core/facets/LiquidationFacet.sol

                        _liquidateNormalMode(s, troveManager, account, debtInStabPool, troveManagerValues.sunsetting);
+                } else if (ICR < troveManagerValues.MCR) {
+                    singleLiquidation = _tryLiquidateWithCap(
+                        troveManager, account, debtInStabPool, troveManagerValues.MCR, troveManagerValues.price


MCR -> 110%

StillFantastic · 2025-04-09T18:51:11Z

src/core/facets/LiquidationFacet.sol

+                    // check the recovery mode grace period
+                    _checkRecoveryModeGracePeriod();
                    singleLiquidation = _tryLiquidateWithCap(
                        troveManager, account, debtInStabPool, troveManagerValues.MCR, troveManagerValues.price


MCR -> 110%

StillFantastic

LiquidationFacet.sol Line 104, 127, 222, 252
- Should include collateral surplus
- totalCollGasCompensation should be multiplied by price

I found two additional problems during the review. Currently, when a Trove gets liquidated, the order of some operations is as follows:

Update surplusBalances for borrower
Send collateral to SP and decrease totalActiveCollateral
In finalizeLiquidation, totalActiveCollateral would be reduced for the amount in (1.)
Send collateral compensation to liquidator

First, in step 2, _exitCollFromStrategy could be triggered when the value of totalActiveCollateral hasn't been fully updated yet. Second, in step 3, _exitColl should be called (similar to _redeemCloseTrove) to ensure there is enough collateral in the contract for users to claim.

These 2 problems should have no effect as long as the retain percentage is 0%. We can consider to fix in another PR.

StillFantastic · 2025-04-23T02:51:52Z

src/core/TroveManager.sol

    {
        _requireCallerIsSatoshiXapp();
+
+        IBorrowerOperationsFacet(satoshiXApp).syncGracePeriod();


This should be called at the end of the function, because here the total system collateral has not been updated yet.

StillFantastic · 2025-04-23T02:55:04Z

src/core/facets/LiquidationFacet.sol

            );
        }
+
+        syncGracePeriod();


syncGracePeriod will be called in the finalizeLiquidation

StillFantastic · 2025-04-23T04:12:39Z

src/core/TroveManager.sol


        totals.collateralToSendToRedeemer = totals.totalCollateralDrawn - totals.collateralFee;

+        IBorrowerOperationsFacet(satoshiXApp).syncGracePeriod();


Should be call at the end of redeemCollateral

StillFantastic

TroveManager.sol also needs to be upgraded.
Does DeploySetup.s.sol need to be updated as well?

StillFantastic · 2025-06-13T20:00:52Z

script/upgrade/UpgradeGracePeriod.s.sol

+    function run() public {
+        vm.startBroadcast(OWNER_PRIVATE_KEY);
+
+        _upgradeBOFaucet();


StillFantastic · 2025-06-13T20:06:15Z

script/upgrade/UpgradeGracePeriod.s.sol

+        _upgradeBOFaucet();
+        _upgradeLiquidationFacet();
+        _upgradeInitializer();


We better bundle these 3 txs into 1 to avoid the case of other txs from users getting in the middle.

StillFantastic · 2025-06-13T20:11:04Z

script/upgrade/UpgradeGracePeriod.s.sol

+
+        // initV2
+        Initializer initializer = Initializer(SATOSHI_X_APP_ADDRESS);
+        initializer.initV2();


Already called in _upgradeInitializer?

StillFantastic · 2025-06-13T21:27:58Z

script/upgrade/UpgradeGracePeriod.s.sol

+        });
+
+        ISatoshiXApp XAPP = ISatoshiXApp(SATOSHI_X_APP_ADDRESS);
+        XAPP.diamondCut(facetCuts, address(0), data);


Does not work for initialize data

StillFantastic · 2025-06-13T21:28:52Z

script/upgrade/UpgradeGracePeriod.s.sol

+        selectors[18] = IBorrowerOperationsFacet.forceResetTM.selector;
+
+        bytes4[] memory newSelectors = new bytes4[](1);
+        newSelectors[0] = IBorrowerOperationsFacet.syncGracePeriod.selector;


There is also a syncGracePeriod in the LiquidationFacet, it causes selector collision.

StillFantastic

I think it's good to upgrade now.
For the new deployment, DeploySetup.s.sol has not been updated yet.

ashl3333 added 2 commits March 12, 2025 16:31

add(LiquidationFacet): liquidate with 110% cap when MCR > ICR > 110%

5b04b1c

feat(LiquidationFacet): recovery mode grace period

dd38e11

jasm1n33 requested a review from RayHuang880301 March 14, 2025 05:30

StillFantastic suggested changes Apr 9, 2025

View reviewed changes

ashl3333 added 2 commits April 13, 2025 03:14

fix & check grace period after liquidation, redeemption, close

04e70f3

patch

2970eb4

StillFantastic suggested changes Apr 23, 2025

View reviewed changes

patch

99b51dd

StillFantastic approved these changes May 1, 2025

View reviewed changes

add upgrade script

137e0f3

StillFantastic suggested changes Jun 13, 2025

View reviewed changes

update script

df88d0b

StillFantastic approved these changes Jun 16, 2025

View reviewed changes

		s.lastGracePeriodStartTimestamp = Config.UNSET_TIMESTAMP;
		s.recoveryModeGracePeriodDuration = Config.MINIMUM_GRACE_PERIOD;


		totals.collateralToSendToRedeemer = totals.totalCollateralDrawn - totals.collateralFee;

		IBorrowerOperationsFacet(satoshiXApp).syncGracePeriod();

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jasm1n33 commented Mar 14, 2025

Uh oh!

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