Project #5: Collateralized Vault

Objective

• Contract that acts as a collateralized debt engine.

• Contract allows users to deposit an asset they own (collateral), to borrow a different asset that the Vault owns (underlying).

• Exchange rate determined by oracle. If value of collateral drops in underlying terms, the user will be liquidated.

Tokens

• Collateral: WETH

• Underlying: DAI

Contract

1. Pull the contract code for both from Etherscan

2. Add a mint() function that allows you to obtain as much as you need for testing.

Workflow

1. Deposit: User deposit WETH into Vault. Vault records WETH deposited.

2. Borrow: User borrows DAI against their WETH deposit.

   • As long as the value DAI they borrow in WETH terms is less than the value of their WETH collateral

   • DAI_value_in_WETH < WETH deposit

   • Vault transfers DAI to the users

   • Vault owner finances DAI to the Vault on deployment

3. Exchange rate: Chainlink Oracle [https://docs.chain.link/docs/ethereum-addresses]

4. Withdrawal

   • To withdraw WETH, the users must repay the DAI they borrowed.

5. Liquidation

   • If ETH/DAI price changes such tt debt_value > collateral_value, Vault will erase user records from the contract -> cancelling the user debt, and at the same time stopping that user from withdrawing their collateral.

Process

Dependencies

• IERC20 interface): forge install yieldprotocol/yield-utils-v2

• Ownable.sol: forge install openZeppelin/openzeppelin-contracts

• AggregatorV3 and MockV3Aggregator: forge install smartcontractkit/chainlink

Pull contracts from Etherscan

• WETH9.sol: https://etherscan.io/address/0xc02aaa39b223fe8d0a0e5c4f27ead9083c756cc2#code

• DAI.sol: https://etherscan.io/address/0x6b175474e89094c44da98b954eedeac495271d0f#code

Updating contracts to v0.8.0

WETH9.sol:

1. Added emit to all events

2. Line 70: uint(-1) refactored to type(uint).max

DAI.sol:

• removed inheritance of LibNote

• line 78 & 79: removed note modifier from function reply and deny

• line 112: removed public from constructor.

• line 190: now deprecated, changed to block.timestamp

• line 192: uint(-1) changed to type(uint).max (also on 131, 147)

Pricing + Decimal scaling

Testing

Action: deposit, borrow, repay, withdraw. liquidated

StateZero:(Vault has 10000 DAI)

• testVaultHasDAI

• User deposits WETH

• cannotWithdraw -> nothing to withdraw. no need to test.

StateDeposited: (Vault has 10000 DAI, 1 WETH) | (user deposited 1 WETH. can borrow, withdraw)

• userCannotWithdrawExcess

• userCannotBeLiquidatedWithoutDebt

• userCannotBorrowInExcess

• User can withdraw freely in absence of debt (fuzzing)

• User can borrow against collateral provided

StateBorrowed: (user has borrowed half of maxDebt. actions:[borrow,repay,withdraw])

• userCannotBorrowExcessOfMargin

• userCannotWithdrawExcessOfMargin

• userCannotbeLiquidated - price unchanged.

• User Repays (Fuzzing)

StateLiquidation (setup price to exceed)

• userLiquidated

• testOnlyOwnerCanCallLiquidate