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Drip the yield within WOETH #2420

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Drip the yield within WOETH #2420

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b54d9e6
comitting Daniel's idea to approach yield dripping within WOETH
sparrowDom Feb 28, 2025
1d11414
minor improvements
sparrowDom Feb 28, 2025
772f924
add safety for DOS-ing yield drip
sparrowDom Feb 28, 2025
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142 changes: 76 additions & 66 deletions contracts/contracts/token/WOETH.sol
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Original file line number Diff line number Diff line change
Expand Up @@ -6,6 +6,8 @@ import { ERC20 } from "@openzeppelin/contracts/token/ERC20/ERC20.sol";
import { IERC20 } from "@openzeppelin/contracts/token/ERC20/IERC20.sol";
import { IERC20Metadata } from "@openzeppelin/contracts/token/ERC20/extensions/IERC20Metadata.sol";
import { SafeERC20 } from "@openzeppelin/contracts/token/ERC20/utils/SafeERC20.sol";
import { SafeCast } from "@openzeppelin/contracts/utils/math/SafeCast.sol";
import { Math } from "@openzeppelin/contracts/utils/math/Math.sol";

import { StableMath } from "../utils/StableMath.sol";
import { Governable } from "../governance/Governable.sol";
Expand All @@ -28,16 +30,21 @@ import { OETH } from "./OETH.sol";
contract WOETH is ERC4626, Governable, Initializable {
using SafeERC20 for IERC20;
using StableMath for uint256;
uint256 public oethCreditsHighres;
using SafeCast for uint256;
uint128 public yieldRate;
uint128 public yieldEnd;
uint256 public hardAssets;
uint256 public yieldAssets;
bool private _oethCreditsInitialized;
uint256[48] private __gap;

uint256 constant YIELD_TIME = 1 days;
uint256 constant MAX_DAILY_DRIP_RATE_PCT = 3;

// no need to set ERC20 name and symbol since they are overridden in WOETH & WOETHBase
constructor(ERC20 underlying_)
ERC20("", "")
ERC4626(underlying_)
Governable()
{}
constructor(
ERC20 underlying_
) ERC20("", "") ERC4626(underlying_) Governable() {}

/**
* @notice Enable OETH rebasing for this contract
Expand All @@ -57,22 +64,15 @@ contract WOETH is ERC4626, Governable, Initializable {
require(!_oethCreditsInitialized, "Initialize2 already called");

_oethCreditsInitialized = true;
/*
* This contract is using creditsBalanceOfHighres rather than creditsBalanceOf since this
* ensures better accuracy when rounding. Also creditsBalanceOf can be a little
* finicky since it reports Highres version of credits and creditsPerToken
* when the account is a fresh one. That doesn't have an effect on mainnet since
* WOETH has already seen transactions. But it is rather annoying in unit test
* environment.
*/
oethCreditsHighres = _getOETHCredits();
hardAssets = OETH(asset()).balanceOf(address(this));
}


function name()
public
view
virtual
override(ERC20, IERC20Metadata)
override(ERC20,IERC20Metadata)
returns (string memory)
{
return "Wrapped OETH";
Expand All @@ -82,7 +82,7 @@ contract WOETH is ERC4626, Governable, Initializable {
public
view
virtual
override(ERC20, IERC20Metadata)
override(ERC20,IERC20Metadata)
returns (string memory)
{
return "wOETH";
Expand All @@ -104,64 +104,78 @@ contract WOETH is ERC4626, Governable, Initializable {
IERC20(asset_).safeTransfer(governor(), amount_);
}

/** @dev See {IERC4262-totalAssets} */
function totalAssets() public view override returns (uint256) {
uint256 creditsPerTokenHighres = OETH(asset())
.rebasingCreditsPerTokenHighres();

return (oethCreditsHighres).divPrecisely(creditsPerTokenHighres);
function yieldDripRate() public {
// no need to update the yield drip rate twice in the same block
if(yieldEnd >= block.timestamp){
return;
}

uint256 _computedAssets = totalAssets();
uint256 _actualAssets = OETH(asset()).balanceOf(address(this));

// all yield has dripped or WOETH has less assets than shown in the accounting
// the later should never happen as we don't do negative rebases on OToken (OETH)
if(_actualAssets <= _computedAssets){
yieldAssets = 0;
yieldRate = 0;
hardAssets = _computedAssets;
yieldEnd = uint128(block.timestamp);
} else if (_actualAssets > _computedAssets ){
// Maximum of 3% increase in assets per day
uint256 _maxYield = _actualAssets * MAX_DAILY_DRIP_RATE_PCT / 100;
uint256 _newYield = _actualAssets - _computedAssets;
_newYield = Math.min(_newYield, _maxYield);
_newYield = Math.min(_newYield, type(uint128).max);

uint128 _newYieldRate = (_newYield / YIELD_TIME).toUint128();
/**
* Don't allow for negative changes in the yield rate if that yield drip is still
* active. If allowed continuous calls to
* deposit/mint/withdraw/redeem could delay or minimize the yield drip.
*
*
* TODO: add a test for this
*/
if (_newYieldRate > yieldRate || yieldEnd + YIELD_TIME < block.timestamp) {
yieldRate = _newYieldRate;
yieldAssets = _newYield;
hardAssets = _computedAssets;
yieldEnd = uint128(block.timestamp);
}
}
}

function _getOETHCredits()
internal
view
returns (uint256 oethCreditsHighres)
{
(oethCreditsHighres, , ) = OETH(asset()).creditsBalanceOfHighres(
address(this)
);
/** @dev See {IERC4262-totalAssets} */
function totalAssets() public view override returns (uint256) {
uint256 _end = yieldEnd;
if(block.timestamp >= _end){
return hardAssets + yieldAssets;
} else if(block.timestamp < _end - YIELD_TIME){
return hardAssets;
}
return hardAssets + yieldAssets * (YIELD_TIME - (_end - block.timestamp)) / (YIELD_TIME + 1);
}

/** @dev See {IERC4262-deposit} */
function deposit(uint256 oethAmount, address receiver)
public
override
returns (uint256 woethAmount)
{
if (oethAmount == 0) return 0;

/**
* Initially we attempted to do the credits calculation within this contract and try
* to mimic OUSD's implementation. This way 1 external call less would be required. Due
* to a different way OUSD is calculating credits:
* - always rounds credits up
* - operates on final user balances before converting to credits
* - doesn't perform additive / subtractive calculation with credits once they are converted
* from balances
*
* We've decided that it is safer to read the credits diff directly from the OUSD contract
* and not face the risk of a compounding error in oethCreditsHighres that could result in
* inaccurate `convertToShares` & `convertToAssets` which consequently would result in faulty
* `previewMint` & `previewRedeem`. High enough error can result in different conversion rates
* which a flash loan entering via `deposit` and exiting via `redeem` (or entering via `mint`
* and exiting via `withdraw`) could take advantage of.
*/
uint256 creditsBefore = _getOETHCredits();
{
woethAmount = super.deposit(oethAmount, receiver);
oethCreditsHighres += _getOETHCredits() - creditsBefore;
hardAssets += oethAmount;
yieldDripRate();
}

/** @dev See {IERC4262-mint} */
function mint(uint256 woethAmount, address receiver)
public
override
returns (uint256 oethAmount)
{
if (woethAmount == 0) return 0;

uint256 creditsBefore = _getOETHCredits();
{
oethAmount = super.mint(woethAmount, receiver);
oethCreditsHighres += _getOETHCredits() - creditsBefore;
hardAssets += oethAmount;
yieldDripRate();
}

/** @dev See {IERC4262-withdraw} */
Expand All @@ -170,11 +184,9 @@ contract WOETH is ERC4626, Governable, Initializable {
address receiver,
address owner
) public override returns (uint256 woethAmount) {
if (oethAmount == 0) return 0;

uint256 creditsBefore = _getOETHCredits();
woethAmount = super.withdraw(oethAmount, receiver, owner);
oethCreditsHighres -= creditsBefore - _getOETHCredits();
hardAssets -= oethAmount;
yieldDripRate();
}

/** @dev See {IERC4262-redeem} */
Expand All @@ -183,10 +195,8 @@ contract WOETH is ERC4626, Governable, Initializable {
address receiver,
address owner
) public override returns (uint256 oethAmount) {
if (woethAmount == 0) return 0;

uint256 creditsBefore = _getOETHCredits();
oethAmount = super.redeem(woethAmount, receiver, owner);
oethCreditsHighres -= creditsBefore - _getOETHCredits();
hardAssets -= oethAmount;
yieldDripRate();
}
}
}
18 changes: 15 additions & 3 deletions contracts/test/token/woeth.js
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Original file line number Diff line number Diff line change
@@ -1,7 +1,7 @@
const { expect } = require("chai");

const { loadDefaultFixture } = require("../_fixture");
const { oethUnits, daiUnits, isFork } = require("../helpers");
const { oethUnits, daiUnits, isFork, advanceTime } = require("../helpers");
const { hardhatSetBalance } = require("../_fund");

describe("WOETH", function () {
Expand Down Expand Up @@ -33,8 +33,14 @@ describe("WOETH", function () {

// rebase OETH balances in wallets by 2x
await increaseOETHSupplyAndRebase(await oeth.totalSupply());

// josh account starts each test with 100 OETH

// 3% max drip rate within WOETH means 34 days for the doubling of WOETH
// value to drip
for (let i = 0; i < 34; i++) {
await woeth.connect(josh).deposit(oethUnits("0"), josh.address);
await advanceTime(86400);
}
});

const increaseOETHSupplyAndRebase = async (wethAmount) => {
Expand Down Expand Up @@ -62,6 +68,8 @@ describe("WOETH", function () {
it("should deposit at the correct ratio", async () => {
await expect(woeth).to.have.a.totalSupply("50");
await woeth.connect(josh).deposit(oethUnits("50"), josh.address);


await expect(josh).to.have.a.balanceOf("75", woeth);
await expect(josh).to.have.a.balanceOf("50", oeth);
await expect(woeth).to.have.a.totalSupply("75");
Expand Down Expand Up @@ -159,6 +167,7 @@ describe("WOETH", function () {
await expect(woeth).to.have.a.totalSupply("50");
await expect(woeth).to.have.approxBalanceOf("100", oeth);
await expect(josh).to.have.a.balanceOf("50", woeth);
await expect(josh).to.have.a.balanceOf("100", oeth);

// attempt to "attack" the contract to inflate the WOETH balance
await oeth.connect(josh).transfer(woeth.address, oethUnits("50"));
Expand All @@ -170,7 +179,10 @@ describe("WOETH", function () {
.redeem(oethUnits("50"), josh.address, josh.address);

await expect(josh).to.have.a.balanceOf("0", woeth);
await expect(woeth).to.have.approxBalanceOf("50", oeth);
await expect(josh).to.have.a.balanceOf("150", oeth);
await expect(woeth).to.have.a.balanceOf("50", oeth);

//await expect(woeth).to.have.approxBalanceOf("50", oeth);
await expect(await woeth.totalAssets()).to.equal("0");
await expect(woeth).to.have.a.totalSupply("0");
});
Expand Down
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