program: handle underflow in calculate_liability_transfer_to_cover_ma… (

#774) * program: handle underflow in calculate_liability_transfer_to_cover_margin_shortage * CHANGELOG
drift-labs · Dec 19, 2023 · 337edac · 337edac
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diff --git a/CHANGELOG.md b/CHANGELOG.md
@@ -15,6 +15,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 ### Fixes
 
+- program: handle underflow in calculate_liability_transfer_to_cover_margin_shortage ([#774](https://github.com/drift-labs/protocol-v2/pull/774))
 - program:  flip auction flag when trigger order adds auction ([#775](https://github.com/drift-labs/protocol-v2/pull/775))
 - program: don't perform funding rate updates when slots_since_amm_update is stale ([#757](https://github.com/drift-labs/protocol-v2/pull/757))
 - program: add update last slot for filler in pay_keeper_flat_reward_for_spot

diff --git a/programs/drift/src/math/liquidation.rs b/programs/drift/src/math/liquidation.rs
@@ -68,7 +68,7 @@ pub fn calculate_liability_transfer_to_cover_margin_shortage(
     if_liquidation_fee: u32,
 ) -> DriftResult<u128> {
     // If unsettled pnl asset weight is 1 and quote asset is 1, this calculation breaks
-    if asset_weight == liability_weight && asset_weight >= liability_weight {
+    if asset_weight >= liability_weight {
         return Ok(u128::MAX);
     }
 
@@ -78,24 +78,25 @@ pub fn calculate_liability_transfer_to_cover_margin_shortage(
         (1, 10_u128.pow(6 - liability_decimals))
     };
 
+    let liability_weight_component = liability_weight.cast::<u128>()?.safe_mul(10)?; // multiply market weights by extra 10 to increase precision
+
+    let asset_weight_component = asset_weight
+        .cast::<u128>()?
+        .safe_mul(10)?
+        .safe_mul(asset_liquidation_multiplier.cast()?)?
+        .safe_div(liability_liquidation_multiplier.cast()?)?;
+
+    if asset_weight_component > liability_weight_component {
+        return Ok(u128::MAX);
+    }
+
     margin_shortage
         .safe_mul(numerator_scale)?
         .safe_mul(PRICE_PRECISION * SPOT_WEIGHT_PRECISION_U128 * 10)?
         .safe_div(
             liability_price
                 .cast::<u128>()?
-                .safe_mul(
-                    liability_weight
-                        .cast::<u128>()?
-                        .safe_mul(10)? // multiply market weights by extra 10 to increase precision
-                        .safe_sub(
-                            asset_weight
-                                .cast::<u128>()?
-                                .safe_mul(10)?
-                                .safe_mul(asset_liquidation_multiplier.cast()?)?
-                                .safe_div(liability_liquidation_multiplier.cast()?)?,
-                        )?,
-                )?
+                .safe_mul(liability_weight_component.safe_sub(asset_weight_component)?)?
                 .safe_sub(
                     liability_price
                         .cast::<u128>()?

diff --git a/programs/drift/src/math/liquidation/tests.rs b/programs/drift/src/math/liquidation/tests.rs
@@ -280,6 +280,31 @@ mod calculate_liability_transfer_to_cover_margin_shortage {
         );
         assert_eq!(liability_transfer, 475669504);
     }
+
+    #[test]
+    pub fn liability_weight_component_less_than_asset_weight_component() {
+        let margin_shortage = 10 * QUOTE_PRECISION; // $10 shortage
+        let asset_weight = SPOT_WEIGHT_PRECISION; // .8
+        let asset_liquidation_multiplier = LIQUIDATION_FEE_PRECISION;
+        let liability_weight = SPOT_WEIGHT_PRECISION; // 1
+        let liability_liquidation_multiplier = 75 * LIQUIDATION_FEE_PRECISION / 100; // .75
+        let liability_decimals = 6;
+        let liability_price = 100 * PRICE_PRECISION_I64;
+
+        let liability_transfer = calculate_liability_transfer_to_cover_margin_shortage(
+            margin_shortage,
+            asset_weight,
+            asset_liquidation_multiplier,
+            liability_weight,
+            liability_liquidation_multiplier,
+            liability_decimals,
+            liability_price,
+            0,
+        )
+        .unwrap();
+
+        assert_eq!(liability_transfer, u128::MAX);
+    }
 }
 
 mod calculate_liability_transfer_implied_by_asset_amount {