fix: adapt MaxBorrow to limit it considering MinCollateralLiquidity a…

…nd MaxSupplyUtilization (#1954)

* fix MaxBorrow

* fix imports

* refactor reducing duplicated code

* fix bug in limits

* adding unit tests and minor tweaks

* changelog and readme

* lint fixes

* markdown lint fix

* Update x/leverage/README.md

Co-authored-by: Adam Moser <63419657+toteki@users.noreply.github.com>

* Update x/leverage/keeper/limits.go

Co-authored-by: Adam Moser <63419657+toteki@users.noreply.github.com>

* Update x/leverage/keeper/limits.go

Co-authored-by: Adam Moser <63419657+toteki@users.noreply.github.com>

* Update x/leverage/keeper/borrows.go

Co-authored-by: Adam Moser <63419657+toteki@users.noreply.github.com>

* Update x/leverage/keeper/borrows.go

Co-authored-by: Adam Moser <63419657+toteki@users.noreply.github.com>

* pr comments

---------

Co-authored-by: Adam Moser <63419657+toteki@users.noreply.github.com>

CHANGELOG.md

@@ -51,6 +51,8 @@ Ref: https://keepachangelog.com/en/1.0.0/
 - [1929](https://github.com/umee-network/umee/pull/1929) Leverage: `MaxWithdraw` now accounts for `MinCollateralLiquidity`
 - [1957](https://github.com/umee-network/umee/pull/1957) Leverage: Reserved amount per block now rounds up.
 - [1956](https://github.com/umee-network/umee/pull/1956) Leverage: token liquidation threshold must be bigger than collateral_weight.
+- [1954](https://github.com/umee-network/umee/pull/1954) Leverage: `MaxBorrow` now accounts for
+  `MinCollateralLiquidity` and `MaxSupplyUtilization`
 
 ## [v4.2.0](https://github.com/umee-network/umee/releases/tag/v4.2.0) - 2023-03-15
 

x/leverage/README.md

@@ -81,7 +81,7 @@ Users have the following actions available to them:
 
   Interest will accrue on borrows for as long as they are not paid off, with the amount owed increasing at a rate of the asset's [Borrow APY](#borrow-apy).
 
-- `MsgMaxBorrow` borrows assets by automatically calculating the maximum amount that can be borrowed.
+- `MsgMaxBorrow` borrows assets by automatically calculating the maximum amount that can be borrowed. This amount is calculated taking into account the user's borrow limit and the module's available liquidity respecting the `min_collateral_liquidity` and `max_supply_utilization` of the `Token`.
 
 - `MsgRepay` assets of a borrowed type, directly reducing the amount owed.
 

x/leverage/keeper/borrows.go

@@ -218,3 +218,51 @@ func (k Keeper) checkSupplyUtilization(ctx sdk.Context, denom string) error {
 	}
 	return nil
 }
+
+// moduleMaxBorrow calculates maximum amount of Token to borrow from the module.
+// The calculation first finds the maximum amount of Token that can be borrowed from the module,
+// respecting the min_collateral_liquidity parameter, then determines the maximum amount of Token that can be borrowed
+// from the module, respecting the max_supply_utilization parameter. The minimum between these two values is
+// selected, given that the min_collateral_liquidity and max_supply_utilization are both limiting factors.
+func (k Keeper) moduleMaxBorrow(ctx sdk.Context, denom string) (sdkmath.Int, error) {
+	// Get the module_available_liquidity
+	moduleAvailableLiquidity, err := k.moduleAvailableLiquidity(ctx, denom)
+	if err != nil {
+		return sdk.ZeroInt(), err
+	}
+
+	// If module_available_liquidity is zero, we cannot borrow anything
+	if !moduleAvailableLiquidity.IsPositive() {
+		return sdk.ZeroInt(), nil
+	}
+
+	// Get max_supply_utilization for the denom
+	token, err := k.GetTokenSettings(ctx, denom)
+	if err != nil {
+		return sdk.ZeroInt(), err
+	}
+	maxSupplyUtilization := token.MaxSupplyUtilization
+
+	// Get total_borrowed from module for the denom
+	totalBorrowed := k.GetTotalBorrowed(ctx, denom).Amount
+
+	// Get module liquidity for the denom
+	liquidity := k.AvailableLiquidity(ctx, denom)
+
+	// The formula to calculate max_borrow respecting the max_supply_utilization is as follows:
+	//
+	// max_supply_utilization = (total_borrowed +  module_max_borrow) / (module_liquidity + total_borrowed)
+	// module_max_borrow = max_supply_utilization * module_liquidity + max_supply_utilization * total_borrowed
+	//						- total_borrowed
+	moduleMaxBorrow := maxSupplyUtilization.MulInt(liquidity).Add(maxSupplyUtilization.MulInt(totalBorrowed)).Sub(
+		sdk.NewDec(totalBorrowed.Int64()),
+	)
+
+	// If module_max_borrow is zero, we cannot borrow anything
+	if !moduleMaxBorrow.IsPositive() {
+		return sdk.ZeroInt(), nil
+	}
+
+	// Use the minimum between module_max_borrow and module_available_liquidity
+	return sdk.MinInt(moduleAvailableLiquidity, moduleMaxBorrow.TruncateInt()), nil
+}

x/leverage/keeper/collateral.go

@@ -206,75 +206,70 @@ func (k *Keeper) checkCollateralShare(ctx sdk.Context, denom string) error {
 	return nil
 }
 
-// moduleMaxWithdraw calculates the maximum available amount of uToken to withdraw
-// from the module given a token denom and a user's address. The calculation first finds the maximum
-// amount of non-collateral uTokens the user can withdraw up to the amount in their wallet, then
-// determines how much collateral can be withdrawn in addition to that. The returned value is the sum
-// of the two values.
-func (k Keeper) moduleMaxWithdraw(ctx sdk.Context, spendableUTokens sdk.Coin) (
-	sdkmath.Int,
-	error,
-) {
+// moduleMaxWithdraw calculates the maximum available amount of uToken to withdraw from the module given the amount of
+// user's spendable tokens. The calculation first finds the maximum amount of non-collateral uTokens the user can
+// withdraw up to the amount in their wallet, then determines how much collateral can be withdrawn in addition to that.
+// The returned value is the sum of the two values.
+func (k Keeper) moduleMaxWithdraw(ctx sdk.Context, spendableUTokens sdk.Coin) (sdkmath.Int, error) {
 	denom := types.ToTokenDenom(spendableUTokens.Denom)
 
-	// Get module liquidity for the denom
-	liquidity := k.AvailableLiquidity(ctx, denom)
-
-	// Get module collateral for the uDenom
-	totalCollateral := k.GetTotalCollateral(ctx, spendableUTokens.Denom)
-	totalTokenCollateral, err := k.ExchangeUTokens(ctx, sdk.NewCoins(totalCollateral))
+	// Get the module_available_liquidity
+	moduleAvailableLiquidity, err := k.moduleAvailableLiquidity(ctx, denom)
 	if err != nil {
 		return sdk.ZeroInt(), err
 	}
 
-	// Get min_collateral_liquidity for the denom
-	token, err := k.GetTokenSettings(ctx, denom)
-	if err != nil {
-		return sdk.ZeroInt(), err
+	// If module_available_liquidity is zero, we cannot withdraw anything
+	if !moduleAvailableLiquidity.IsPositive() {
+		return sdkmath.ZeroInt(), nil
 	}
-	minCollateralLiquidity := token.MinCollateralLiquidity
 
-	// The formula to calculate the available_module_liquidity is as follows:
-	//
-	// 	min_collateral_liquidity = (module_liquidity - available_module_liquidity) / module_collateral
-	// 	available_module_liquidity = module_liquidity - min_collateral_liquidity * module_collateral
-	availableModuleLiquidity :=
-		sdk.NewDec(liquidity.Int64()).Sub(minCollateralLiquidity.MulInt(totalTokenCollateral.AmountOf(denom)))
-
-	// If available_module_liquidity is 0 or less, we cannot withdraw anything
-	if availableModuleLiquidity.LTE(sdk.ZeroDec()) {
-		return sdkmath.ZeroInt(), nil
+	// If user_spendable_utokens >= module_available_liquidity we can only withdraw
+	// module_available_liquidity.
+	if spendableUTokens.Amount.GTE(moduleAvailableLiquidity) {
+		return moduleAvailableLiquidity, nil
 	}
 
-	// If user_spendable_utokens >= available_module_liquidity we can only withdraw
-	// available_module_liquidity.
-	if spendableUTokens.Amount.GTE(availableModuleLiquidity.TruncateInt()) {
-		return availableModuleLiquidity.TruncateInt(), nil
+	// Get module collateral for the uDenom
+	totalCollateral := k.GetTotalCollateral(ctx, spendableUTokens.Denom)
+	totalTokenCollateral, err := k.ExchangeUTokens(ctx, sdk.NewCoins(totalCollateral))
+	if err != nil {
+		return sdk.ZeroInt(), err
 	}
 
-	// If after subtracting all the user_spendable_utokens from the available_module_liquidity,
+	// If after subtracting all the user_spendable_utokens from the module_available_liquidity,
 	// the result is higher than the total module_collateral,
 	// we can withdraw user_spendable_utokens + module_collateral.
-	if availableModuleLiquidity.TruncateInt().Sub(spendableUTokens.Amount).GTE(totalTokenCollateral.AmountOf(denom)) {
+	if moduleAvailableLiquidity.Sub(spendableUTokens.Amount).GTE(totalTokenCollateral.AmountOf(denom)) {
 		return spendableUTokens.Amount.Add(totalTokenCollateral.AmountOf(denom)), nil
 	}
 
-	// At this point we know that there is enough available_module_liquidity to withdraw user_spendable_utokens.
-	// Now we need to get the available_module_collateral after withdrawing user_spendable_utokens:
+	// Get module liquidity for the denom
+	liquidity := k.AvailableLiquidity(ctx, denom)
+
+	// Get min_collateral_liquidity for the denom
+	token, err := k.GetTokenSettings(ctx, denom)
+	if err != nil {
+		return sdk.ZeroInt(), err
+	}
+	minCollateralLiquidity := token.MinCollateralLiquidity
+
+	// At this point we know that there is enough module_available_liquidity to withdraw user_spendable_utokens.
+	// Now we need to get the module_available_collateral after withdrawing user_spendable_utokens:
 	//
-	// min_collateral_liquidity = (module_liquidity - user_spendable_utokens - available_module_collateral)
-	//									/ (module_collateral  - available_module_collateral)
+	// min_collateral_liquidity = (module_liquidity - user_spendable_utokens - module_available_collateral)
+	//									/ (module_collateral  - module_available_collateral)
 	//
-	// available_module_collateral = (module_liquidity - user_spendable_utokens - min_collateral_liquidity
+	// module_available_collateral = (module_liquidity - user_spendable_utokens - min_collateral_liquidity
 	//									* module_collateral) / (1 - min_collateral_liquidity)
-	availableModuleCollateral :=
+	moduleAvailableCollateral :=
 		(sdk.NewDec(liquidity.Sub(spendableUTokens.Amount).Int64()).Sub(
 			minCollateralLiquidity.MulInt(
 				totalTokenCollateral.AmountOf(denom),
 			),
 		)).Quo(sdk.NewDec(1).Sub(minCollateralLiquidity))
 
-	// Adding (user_spendable_utokens + available_module_collateral) we obtain the max uTokens the account can
+	// Adding (user_spendable_utokens + module_available_collateral) we obtain the max uTokens the account can
 	// withdraw from the module.
-	return spendableUTokens.Amount.Add(availableModuleCollateral.TruncateInt()), nil
+	return spendableUTokens.Amount.Add(moduleAvailableCollateral.TruncateInt()), nil
 }

x/leverage/keeper/grpc_query.go

@@ -397,7 +397,7 @@ func (q Querier) MaxBorrow(
 		// will be nil and the resulting value will be what
 		// can safely be borrowed even with missing prices.
 		// On non-nil error here, max borrow is zero.
-		maxBorrow, err := q.Keeper.maxBorrow(ctx, addr, denom)
+		maxBorrow, err := q.Keeper.userMaxBorrow(ctx, addr, denom)
 		if err == nil && maxBorrow.IsPositive() {
 			maxTokens = maxTokens.Add(maxBorrow)
 		}

x/leverage/keeper/limits.go

@@ -93,10 +93,10 @@ func (k *Keeper) userMaxWithdraw(ctx sdk.Context, addr sdk.AccAddress, denom str
 	return sdk.NewCoin(uDenom, withdrawAmount), sdk.NewCoin(uDenom, walletUtokens), nil
 }
 
-// maxBorrow calculates the maximum amount of a given token an account can currently borrow.
+// userMaxBorrow calculates the maximum amount of a given token an account can currently borrow.
 // input denom should be a base token. If oracle prices are missing for some of the borrower's
 // collateral, computes the maximum safe borrow allowed by only the collateral whose prices are known
-func (k *Keeper) maxBorrow(ctx sdk.Context, addr sdk.AccAddress, denom string) (sdk.Coin, error) {
+func (k *Keeper) userMaxBorrow(ctx sdk.Context, addr sdk.AccAddress, denom string) (sdk.Coin, error) {
 	if types.HasUTokenPrefix(denom) {
 		return sdk.Coin{}, types.ErrUToken
 	}
@@ -190,3 +190,33 @@ func (k *Keeper) maxCollateralFromShare(ctx sdk.Context, denom string) (sdkmath.
 	// return the computed maximum or the current uToken supply, whichever is smaller
 	return sdk.MinInt(k.GetUTokenSupply(ctx, denom).Amount, maxUTokens.Amount), nil
 }
+
+// moduleAvailableLiquidity calculates the maximum available liquidity of a Token denom from the module can be used,
+// respecting the MinCollateralLiquidity set for given Token.
+func (k Keeper) moduleAvailableLiquidity(ctx sdk.Context, denom string) (sdkmath.Int, error) {
+	// Get module liquidity for the Token
+	liquidity := k.AvailableLiquidity(ctx, denom)
+
+	// Get module collateral for the associated uToken
+	totalCollateral := k.GetTotalCollateral(ctx, types.ToUTokenDenom(denom))
+	totalTokenCollateral, err := k.ExchangeUTokens(ctx, sdk.NewCoins(totalCollateral))
+	if err != nil {
+		return sdkmath.Int{}, err
+	}
+
+	// Get min_collateral_liquidity for the denom
+	token, err := k.GetTokenSettings(ctx, denom)
+	if err != nil {
+		return sdkmath.Int{}, err
+	}
+	minCollateralLiquidity := token.MinCollateralLiquidity
+
+	// The formula to calculate the module_available_liquidity is as follows:
+	//
+	// 	min_collateral_liquidity = (module_liquidity - module_available_liquidity) / module_collateral
+	// 	module_available_liquidity = module_liquidity - min_collateral_liquidity * module_collateral
+	moduleAvailableLiquidity :=
+		sdk.NewDec(liquidity.Int64()).Sub(minCollateralLiquidity.MulInt(totalTokenCollateral.AmountOf(denom)))
+
+	return sdk.MaxInt(moduleAvailableLiquidity.TruncateInt(), sdk.ZeroInt()), nil
+}

x/leverage/keeper/msg_server.go

@@ -367,15 +367,28 @@ func (s msgServer) MaxBorrow(
 	// but not this token or any of their borrows, error
 	// will be nil and the resulting value will be what
 	// can safely be borrowed even with missing prices.
-	maxBorrow, err := s.keeper.maxBorrow(ctx, borrowerAddr, msg.Denom)
+	userMaxBorrow, err := s.keeper.userMaxBorrow(ctx, borrowerAddr, msg.Denom)
 	if err != nil {
 		return nil, err
 	}
-	if maxBorrow.IsZero() {
+	if userMaxBorrow.IsZero() {
 		return &types.MsgMaxBorrowResponse{Borrowed: coin.Zero(msg.Denom)}, nil
 	}
 
-	if err := s.keeper.Borrow(ctx, borrowerAddr, maxBorrow); err != nil {
+	// Get the max available to borrow from the module
+	moduleMaxBorrow, err := s.keeper.moduleMaxBorrow(ctx, msg.Denom)
+	if err != nil {
+		return nil, err
+	}
+	if moduleMaxBorrow.IsZero() {
+		return &types.MsgMaxBorrowResponse{Borrowed: coin.Zero(msg.Denom)}, nil
+	}
+
+	// Select the minimum between user_max_borrow and module_max_borrow
+	userMaxBorrow.Amount = sdk.MinInt(userMaxBorrow.Amount, moduleMaxBorrow)
+
+	// Proceed to borrow
+	if err := s.keeper.Borrow(ctx, borrowerAddr, userMaxBorrow); err != nil {
 		return nil, err
 	}
 
@@ -387,26 +400,26 @@ func (s msgServer) MaxBorrow(
 	}
 
 	// Check MaxSupplyUtilization after transaction
-	if err = s.keeper.checkSupplyUtilization(ctx, maxBorrow.Denom); err != nil {
+	if err = s.keeper.checkSupplyUtilization(ctx, userMaxBorrow.Denom); err != nil {
 		return nil, err
 	}
 
 	// Check MinCollateralLiquidity is still satisfied after the transaction
-	if err = s.keeper.checkCollateralLiquidity(ctx, maxBorrow.Denom); err != nil {
+	if err = s.keeper.checkCollateralLiquidity(ctx, userMaxBorrow.Denom); err != nil {
 		return nil, err
 	}
 
 	s.keeper.Logger(ctx).Debug(
 		"assets borrowed",
 		"borrower", msg.Borrower,
-		"amount", maxBorrow.String(),
+		"amount", moduleMaxBorrow.String(),
 	)
 	sdkutil.Emit(&ctx, &types.EventBorrow{
 		Borrower: msg.Borrower,
-		Asset:    maxBorrow,
+		Asset:    userMaxBorrow,
 	})
 	return &types.MsgMaxBorrowResponse{
-		Borrowed: maxBorrow,
+		Borrowed: userMaxBorrow,
 	}, nil
 }