feat: Dynamic c value limit updates (#758)

* dynamic c value limit updates * add constants and tests * changelog * Update x/liquidstakeibc/keeper/keeper.go Co-authored-by: Puneet <[email protected]> * use else --------- Co-authored-by: Puneet <[email protected]>
persistenceOne · Feb 8, 2024 · 417d692 · 417d692
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diff --git a/CHANGELOG.md b/CHANGELOG.md
@@ -38,6 +38,7 @@ Ref: https://keepachangelog.com/en/1.0.0/
 
 ### Features
 
+- [758](https://github.com/persistenceOne/pstake-native/pull/758) Dynamic C Value limit updates.
 - [757](https://github.com/persistenceOne/pstake-native/pull/757) Change ibc transfer to use timeoutTimestamp instead of
   timeoutHeight
 - [755](https://github.com/persistenceOne/pstake-native/pull/755) Add channel-id, port to ratesync host-chains and

diff --git a/x/liquidstakeibc/keeper/keeper.go b/x/liquidstakeibc/keeper/keeper.go
@@ -3,6 +3,7 @@ package keeper
 import (
 	"fmt"
 
+	"cosmossdk.io/math"
 	"github.com/cometbft/cometbft/libs/log"
 	"github.com/cosmos/cosmos-sdk/baseapp"
 	"github.com/cosmos/cosmos-sdk/codec"
@@ -301,9 +302,11 @@ func (k *Keeper) UpdateCValues(ctx sdk.Context) {
 		hc.LastCValue = hc.CValue
 		hc.CValue = cValue
 		k.SetHostChain(ctx, hc)
+
 		if err := k.Hooks().PostCValueUpdate(ctx, hc.MintDenom(), hc.HostDenom, hc.CValue); err != nil {
 			k.Logger(ctx).Error("PostCValueUpdate hook failed with ", "err:", err)
 		}
+
 		ctx.EventManager().EmitEvent(
 			sdk.NewEvent(
 				types.EventTypeCValueUpdate,
@@ -333,6 +336,8 @@ func (k *Keeper) UpdateCValues(ctx sdk.Context) {
 					sdk.NewAttribute(types.AttributeNewCValue, hc.CValue.String()),
 				),
 			)
+		} else {
+			k.RecalculateCValueLimits(ctx, hc, mintedAmount, liquidStakedAmount)
 		}
 	}
 }
@@ -341,6 +346,43 @@ func (k *Keeper) CValueWithinLimits(hc *types.HostChain) bool {
 	return hc.CValue.LT(hc.Params.UpperCValueLimit) && hc.CValue.GT(hc.Params.LowerCValueLimit)
 }
 
+func (k *Keeper) RecalculateCValueLimits(ctx sdk.Context, hc *types.HostChain, mintedAmount, lsAmount math.Int) {
+	// if there has been no activity on the chain yet, leave the limits as they are
+	if mintedAmount.IsZero() || lsAmount.IsZero() {
+		return
+	}
+
+	// calculate twice the amount of rewards which will be transferred next rewards epoch
+	diff := sdk.NewDecFromInt(hc.GetHostChainTotalDelegations()).
+		Mul(hc.AutoCompoundFactor).Mul(sdk.NewDec(types.CValueDynamicLowerDiff))
+
+	// calculate the new lower and upper limit
+	newLowerLimit := sdk.NewDecFromInt(mintedAmount).Quo(sdk.NewDecFromInt(lsAmount).Add(diff))
+	newUpperLimit := hc.CValue.Add(hc.CValue.Sub(newLowerLimit).Mul(sdk.NewDec(types.CValueDynamicUpperDiff)))
+
+	// update the limits on the host chain
+	hc.Params.LowerCValueLimit = newLowerLimit
+	hc.Params.UpperCValueLimit = newUpperLimit
+	k.SetHostChain(ctx, hc)
+
+	k.Logger(ctx).Info(
+		fmt.Sprintf("Updated C Value limits for %s. Current C Value %s, new lower limit %s, new upper limit %s",
+			hc.ChainId,
+			hc.CValue,
+			hc.Params.LowerCValueLimit,
+			hc.Params.UpperCValueLimit,
+		),
+	)
+	ctx.EventManager().EmitEvent(
+		sdk.NewEvent(
+			types.EventTypeCValueLimitsUpdated,
+			sdk.NewAttribute(types.AttributeChainID, hc.ChainId),
+			sdk.NewAttribute(types.AttributeLowerLimit, hc.Params.LowerCValueLimit.String()),
+			sdk.NewAttribute(types.AttributeUpperLimit, hc.Params.UpperCValueLimit.String()),
+		),
+	)
+}
+
 func (k *Keeper) CalculateAutocompoundLimit(autocompoundFactor sdk.Dec) sdk.Dec {
 	return autocompoundFactor.Quo(sdk.NewDec(types.Percentage)).Quo(sdk.NewDec(types.DaysInYear))
 }

diff --git a/x/liquidstakeibc/keeper/keeper_test.go b/x/liquidstakeibc/keeper/keeper_test.go
@@ -276,3 +276,29 @@ func (suite *IntegrationTestSuite) TestUpdateCValues() {
 	hc, _ = pstakeApp.LiquidStakeIBCKeeper.GetHostChain(ctx, suite.chainB.ChainID)
 	suite.Require().Equal(false, hc.Active)
 }
+
+func (suite *IntegrationTestSuite) TestRecalculateCValueLimits() {
+	pstakeApp, ctx := suite.app, suite.ctx
+	hc, found := pstakeApp.LiquidStakeIBCKeeper.GetHostChain(ctx, suite.chainB.ChainID)
+	suite.Require().Equal(true, found)
+	suite.Require().NotNil(hc)
+	suite.Require().Equal(sdk.NewDec(1), hc.CValue)
+
+	pstakeApp.LiquidStakeIBCKeeper.RecalculateCValueLimits(ctx, hc, sdk.NewInt(0), sdk.NewInt(0))
+	suite.Require().Equal("0.950000000000000000", hc.Params.LowerCValueLimit.String())
+	suite.Require().Equal("1.050000000000000000", hc.Params.UpperCValueLimit.String())
+
+	hc.Validators[0].DelegatedAmount = sdk.NewInt(1000)
+	pstakeApp.LiquidStakeIBCKeeper.SetHostChainValidator(ctx, hc, hc.Validators[0])
+
+	pstakeApp.LiquidStakeIBCKeeper.RecalculateCValueLimits(ctx, hc, sdk.NewInt(1000), sdk.NewInt(1000))
+
+	expectedLower := sdk.NewDec(1000).Quo(sdk.NewDec(1000).
+		Add(sdk.NewDec(1000).Mul(hc.AutoCompoundFactor).Mul(sdk.NewDec(types.CValueDynamicLowerDiff))))
+
+	suite.Require().Equal(expectedLower, hc.Params.LowerCValueLimit)
+
+	expectedUpper := hc.CValue.Add(hc.CValue.Sub(hc.Params.LowerCValueLimit).Mul(sdk.NewDec(types.CValueDynamicUpperDiff)))
+
+	suite.Require().Equal(expectedUpper, hc.Params.UpperCValueLimit)
+}
diff --git a/x/liquidstakeibc/types/events.go b/x/liquidstakeibc/types/events.go
@@ -10,6 +10,7 @@ const (
 	EventTypeSlashing                              = "validator_slash"
 	EventTypeUpdateParams                          = "update_params"
 	EventTypeChainDisabled                         = "chain_disabled"
+	EventTypeCValueLimitsUpdated                   = "c_value_limits"
 	EventTypeValidatorStatusUpdate                 = "validator_status_update"
 	EventTypeValidatorExchangeRateUpdate           = "validator_exchange_rate_update"
 	EventTypeValidatorDelegableStateUpdate         = "validator_delegable_state_update"
@@ -58,6 +59,8 @@ const (
 	AttributeChainID                         = "chain_id"
 	AttributeNewCValue                       = "new_c_value"
 	AttributeOldCValue                       = "old_c_value"
+	AttributeLowerLimit                      = "lower_limit"
+	AttributeUpperLimit                      = "upper_limit"
 	AttributeEpoch                           = "epoch_number"
 	AttributeValidatorAddress                = "validator_address"
 	AttributeExistingDelegation              = "existing_delegation"

diff --git a/x/liquidstakeibc/types/keys.go b/x/liquidstakeibc/types/keys.go
@@ -58,6 +58,10 @@ const (
 	Percentage int64 = 100
 
 	DaysInYear int64 = 365
+
+	CValueDynamicLowerDiff int64 = 2
+
+	CValueDynamicUpperDiff int64 = 10
 )
 
 // Consts for KV updates, update host chain