Discussion - Imbalanced Curve Metapool Liquidity Removal Effects on PHOTWAPOracle

[steve0xp]

Challenge:
Curve metapools have a number of ways to interact with them, standardized through curve contract and interface architectures. Aside from removing liquidity at the respective metapool's ratio of underlying assets, one can withdraw specific balances of underlying assets when withdrawing their LP tokens (which are burnt ultimately).

PHOTWAPOracle.sol refreshes uint256 latestUSDPHOPrice everytime getPrice() is called assuming logical conditions are met. The price is based off of the PHO:FraxBP metapool. The metapool balances ratio are changed though when undergoing imbalanced LP token redemption through using curve functions like: remove_liquidity_imbalance() and remove_liquidity_one_coin().

Tasks for this issue include, but are not limited to:

• Research curve metapool functions listed above
• Write additional tests and update contracts if needed (to contracts && tests found in PR Write PHOTWAPOracle Contracts && Tests #44)

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Useful links to other contingency plans include:

• Curve docs: https://curve.readthedocs.io/factory-pools.html#StableSwap.remove_liquidity_imbalance:~:text=StableSwap.remove_liquidity_one_coin,%EF%83%81

[steve0xp]

Wrote tests (of which aren't including in our codebase yet) but they were showing that the price was fluctuating from what was expected:

/// @notice test getPrice() after genesis && liquidity removed at imbalanced ratio wrt pool ratio
    /// TODO - These tests need revisiting once it curve-specific issues are understood (see github issue).
    function testGetPriceRemoveLiquidityImbalanced() public {
        twapFixture();
        vm.startPrank(owner);
        uint256[2] memory withdrawAmounts = [twoHundredFiftyThousand_d18, tenThousand_d18];
        fraxBPPhoMetapool.remove_liquidity_imbalance(withdrawAmounts, fraxBPPhoMetapool.balanceOf(owner), owner);
        uint256 expectedNewUSDPHOPrice = _getNewUSDPHOPrice();
        uint256 oldUSDPHOPrice = phoTwapOracle.latestUSDPHOPrice();
        vm.expectEmit(true, true, false, true);
        emit PriceUpdated(expectedNewUSDPHOPrice, block.timestamp);
        phoTwapOracle.getPrice();
        uint256 newUSDPHOPrice = phoTwapOracle.latestUSDPHOPrice();
        assertEq(expectedNewUSDPHOPrice, newUSDPHOPrice);
        assertEq(oldUSDPHOPrice != newUSDPHOPrice, true);
        vm.stopPrank();
    }

    /// @notice test getPrice() after genesis && liquidity removed by one single token ()
    function testGetPriceRemoveLiquidityOneToken() public {
        twapFixture();
        vm.startPrank(owner);
        uint256 burnAmount = twoHundredFiftyThousand_d18;
        fraxBPPhoMetapool.remove_liquidity_one_coin(burnAmount, 0, 0, owner);
        uint256 expectedNewUSDPHOPrice = _getNewUSDPHOPrice();
        uint256 oldUSDPHOPrice = phoTwapOracle.latestUSDPHOPrice();
        vm.expectEmit(true, true, false, true);
        emit PriceUpdated(expectedNewUSDPHOPrice, block.timestamp);
        phoTwapOracle.getPrice();
        uint256 newUSDPHOPrice = phoTwapOracle.latestUSDPHOPrice();
        assertEq(expectedNewUSDPHOPrice, newUSDPHOPrice);
        assertEq(oldUSDPHOPrice != newUSDPHOPrice, true);
        vm.stopPrank();
    }