feat: add LSM to the SDK's v0.45.16-ics-lsm branch

codec/amino_codec_test.go

@@ -120,7 +120,7 @@ func TestAminoCodecUnpackAnyFails(t *testing.T) {
 
 func TestAminoCodecFullDecodeAndEncode(t *testing.T) {
  // This tx comes from https://github.com/cosmos/cosmos-sdk/issues/8117.
- txSigned := `{"type":"cosmos-sdk/StdTx","value":{"msg":[{"type":"cosmos-sdk/MsgCreateValidator","value":{"description":{"moniker":"fulltest","identity":"satoshi","website":"example.com","details":"example inc"},"commission":{"rate":"0.500000000000000000","max_rate":"1.000000000000000000","max_change_rate":"0.200000000000000000"},"min_self_delegation":"1000000","delegator_address":"cosmos14pt0q5cwf38zt08uu0n6yrstf3rndzr5057jys","validator_address":"cosmosvaloper14pt0q5cwf38zt08uu0n6yrstf3rndzr52q28gr","pubkey":{"type":"tendermint/PubKeyEd25519","value":"CYrOiM3HtS7uv1B1OAkknZnFYSRpQYSYII8AtMMtev0="},"value":{"denom":"umuon","amount":"700000000"}}}],"fee":{"amount":[{"denom":"umuon","amount":"6000"}],"gas":"160000"},"signatures":[{"pub_key":{"type":"tendermint/PubKeySecp256k1","value":"AwAOXeWgNf1FjMaayrSnrOOKz+Fivr6DiI/i0x0sZCHw"},"signature":"RcnfS/u2yl7uIShTrSUlDWvsXo2p2dYu6WJC8VDVHMBLEQZWc8bsINSCjOnlsIVkUNNe1q/WCA9n3Gy1+0zhYA=="}],"memo":"","timeout_height":"0"}}`
+ txSigned := `{"type":"cosmos-sdk/StdTx","value":{"msg":[{"type":"cosmos-sdk/MsgCreateValidator","value":{"description":{"moniker":"fulltest","identity":"satoshi","website":"example.com","details":"example inc"},"commission":{"rate":"0.500000000000000000","max_rate":"1.000000000000000000","max_change_rate":"0.200000000000000000"},"delegator_address":"cosmos14pt0q5cwf38zt08uu0n6yrstf3rndzr5057jys","validator_address":"cosmosvaloper14pt0q5cwf38zt08uu0n6yrstf3rndzr52q28gr","pubkey":{"type":"tendermint/PubKeyEd25519","value":"CYrOiM3HtS7uv1B1OAkknZnFYSRpQYSYII8AtMMtev0="},"value":{"denom":"umuon","amount":"700000000"}}}],"fee":{"amount":[{"denom":"umuon","amount":"6000"}],"gas":"160000"},"signatures":[{"pub_key":{"type":"tendermint/PubKeySecp256k1","value":"AwAOXeWgNf1FjMaayrSnrOOKz+Fivr6DiI/i0x0sZCHw"},"signature":"RcnfS/u2yl7uIShTrSUlDWvsXo2p2dYu6WJC8VDVHMBLEQZWc8bsINSCjOnlsIVkUNNe1q/WCA9n3Gy1+0zhYA=="}],"memo":"","timeout_height":"0"}}`
  legacyCdc := simapp.MakeTestEncodingConfig().Amino
  var tx legacytx.StdTx
  err := legacyCdc.UnmarshalJSON([]byte(txSigned), &tx)

docs/spec/lsm/adr-001.md

@@ -0,0 +1,142 @@
+# ADR-001: Exempt delegations as a transitionary mechanism for safe adoption of liquid staking.
+
+## Context 
+
+Liquid proof of stake may exacerbates the principal agent risk that exists at the heart of the delegated proof of stake system. The core of the problem is that validators do not actually own the stake that is delegated to them. This leaves the open to perverse incentives to attack the consensus system.
+
+Cosmos introduced the idea of min self bond in the staking. This creates a minimum amount of stake the must be bonded by the validators operator key. 
+
+This feature has very little effect on the behavior of delegates.
+
+## Proposal:
+
+The liquid staking system will introduce a new system. Delegator can issue a transaction that exempts their delegation to a specific validator from liquid staking. Once this transaction is issued, the SharesToToken tx will fail for the delegation. 
+
+Furthermore there will be a governance controlled parameter that will restrict the total number of tokenized shares issued for each validator by the sum of the exempt delegations multiplied by a scalar value.
+
+For example, if governance has set value to 10. Once a delegation exempts 1000 stake from the liquid staking system, then then other delegators may chose to issue up 10,000 tokenized shares with the tokens to shares transactions.
+
+If the maximum amount of tokenized shares are issued, the exempt delegation cannot be undelegated unless the validator chooses to leave the active validator set.
+
+
+ ## Technical Spec
+
+ Please see this document for a full technical spec of the LSM:
+ https://docs.google.com/document/d/1WYPUHmQii4o-q2225D_XyqE6-1bvM7Q128Y9amqRwqY/edit#heading=h.zcpx47mn67kl
+
+## Economics:
+
+We expect that eventually governance may decide that the principal agent problems between validators and liquid staking are resolved through the existence of mature liquid staking synthetic asset systems and their associate risk framework. Governance can effectively disable the feature by setting the scalar value to -1 and allow unlimited minting and all exempt delegations to be freely undelegated.
+
+During the transitionary period, this creates a market for exempt from liquid staking delegations that may serve to help further decentralize the validator set.
+
+It also allows multiple participants in a validator business to hold their personal stakes in segregated accounts but all collectively contribute towards demonstrating alignment with the safety of the protocol.
+
+## Software parameters
+
+A new governance parameter is introduced that defines the ratio of exempt to issued tokenized shares. This is called the exemption factor.
+
+## Modifying the core validator data structures
+
+### Validator
+
+``` proto
+// Validator defines a validator, together with the total amount of the
+// Validator's bond shares and their exchange rate to coins. Slashing results in
+// a decrease in the exchange rate, allowing correct calculation of future
+// undelegations without iterating over delegators. When coins are delegated to
+// this validator, the validator is credited with a delegation whose number of
+// bond shares is based on the amount of coins delegated divided by the current
+// exchange rate. Voting power can be calculated as total bonded shares
+// multiplied by exchange rate.
+message Validator {
+ option (gogoproto.equal) = false;
+ option (gogoproto.goproto_stringer) = false;
+ option (gogoproto.goproto_getters) = false;
+
+ // operator_address defines the address of the validator's operator; bech encoded in JSON.
+ string operator_address = 1 [(gogoproto.moretags) = "yaml:\"operator_address\""];
+ // consensus_pubkey is the consensus public key of the validator, as a Protobuf Any.
+ google.protobuf.Any consensus_pubkey = 2
+ [(cosmos_proto.accepts_interface) = "cosmos.crypto.PubKey", (gogoproto.moretags) = "yaml:\"consensus_pubkey\""];
+ // jailed defined whether the validator has been jailed from bonded status or not.
+ bool jailed = 3;
+ // status is the validator status (bonded/unbonding/unbonded).
+ BondStatus status = 4;
+ // tokens define the delegated tokens (incl. self-delegation).
+ string tokens = 5 [(gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Int", (gogoproto.nullable) = false];
+ // delegator_shares defines total shares issued to a validator's delegators.
+ string delegator_shares = 6 [
+ (gogoproto.moretags) = "yaml:\"delegator_shares\"",
+ (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
+ (gogoproto.nullable) = false
+ ];
+ // description defines the description terms for the validator.
+ Description description = 7 [(gogoproto.nullable) = false];
+ // unbonding_height defines, if unbonding, the height at which this validator has begun unbonding.
+ int64 unbonding_height = 8 [(gogoproto.moretags) = "yaml:\"unbonding_height\""];
+ // unbonding_time defines, if unbonding, the min time for the validator to complete unbonding.
+ google.protobuf.Timestamp unbonding_time = 9
+ [(gogoproto.nullable) = false, (gogoproto.stdtime) = true, (gogoproto.moretags) = "yaml:\"unbonding_time\""];
+ // commission defines the commission parameters.
+ Commission commission = 10 [(gogoproto.nullable) = false];
+ // Number of shares marked_exempt_to_this_validator
+ string total_exempt_shares = 11[
+ (gogoproto.moretags) = "yaml:\"total_exempt_shares\"",
+ (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
+ (gogoproto.nullable) = false
+ ];
+
+ string total_tokenized_shares = 12[
+ (gogoproto.moretags) = "yaml:\"total_tokenized_shares\"",
+ (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec",
+ (gogoproto.nullable) = false
+ ]
+}
+
+```
+### Delegation
+
+```proto
+
+// Delegation represents the bond with tokens held by an account. It is
+// owned by one delegator, and is associated with the voting power of one
+// validator.
+message Delegation {
+ option (gogoproto.equal) = false;
+ option (gogoproto.goproto_getters) = false;
+ option (gogoproto.goproto_stringer) = false;
+
+ // delegator_address is the bech32-encoded address of the delegator.
+ string delegator_address = 1 [(gogoproto.moretags) = "yaml:\"delegator_address\""];
+ // validator_address is the bech32-encoded address of the validator.
+ string validator_address = 2 [(gogoproto.moretags) = "yaml:\"validator_address\""];
+ // shares define the delegation shares received.
+ string shares = 3 [(gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec", (gogoproto.nullable) = false];
+ // has this delegation been marked as exempt.
+ bool exempt = 4 
+}
+```
+### MsgExemptDelegation
+
+``` proto
+// MsgDelegate defines a SDK message for performing a delegation of coins
+// from a delegator to a validator.
+message MsgExemptDelegation {
+ option (gogoproto.equal) = false;
+ option (gogoproto.goproto_getters) = false;
+
+ string delegator_address = 1 [(gogoproto.moretags) = "yaml:\"delegator_address\""];
+ string validator_address = 2 [(gogoproto.moretags) = "yaml:\"validator_address\""];
+}
+
+```
+
+
+### Core business logic
+
+* Remove min self delegation from the code base and all logic that uses it.
+* MsgTokenizeShares must check the total exempt delegation from the validator, the governance parameter and the total tokenized shares to see if a tokenization is permitted
+* MsgExemptDelegation increases the sum of total exempt delegation.
+* Calls to MsgRedelegate a Delegation that is Exempt always fails.
+* Calls to MsgUndelegate must check if the (exempt_shares - undelegated shares) * exemption_factor >= total_tokeniz_shares