Kolibri Liquidation Pool

A liquidation pool contract where users can stake kUSD for use in oven liquidations and receive the profits of liquidations.

Functionality

Liquidity Providers ("LPs")

Liquidity Providers ("LPs") stake kUSD in the contract by calling deposit. In return they receive QLkUSD (Quipuswap Liquidating kUSD) tokens, which entitle to them to their share of the kUSD in the Liquidation Pool. The deposited kUSD is now available to help liquidate undercollateralized Kolibri ovens.

LPs can redeem QLkUSD tokens by calling redeem at any time. The QLkUSD tokens are burnt and the LP receives their share of kUSD back from the pool.

Liquidations

Any user may call liquidate with the address of an undercollateralized Kolibri oven. Provided that there is sufficient kUSD to liquidate the oven, and the oven is actually undercollateralized, then the following will process will happen:

The Kolibri oven is liquidated
The liquidation pool receives XTZ from the liquidation.
Of the received XTZ, a percentage (currently 1%) is sent to the user who initiated the transaction to reward them for liquidating through the pool.
The remaining XTZ is immediately converted to kUSD on Quipuswap. This kUSD is distributed ratably to users in the liquidation pool.

Governance

A special contract, called the governor can make changes to the contract. Currently, the governor is a two of three multisig with an eight hour timelock.

Specifically, the following parameters are governable:

rewardPercent: The percentage of received XTZ to pay the user who initiated the transaction as a reward for using the pool.
governorAddress: The governor may rotate itself to a new address (ex. a new multisig or a DAO)

Additionally, a number of mundane plumbing parameters are also updatable in order to support upgrades in Kolibri, Quipuswap, and Tezos metadata standards.

quipuswapPoolAddress: The address of the Quipuswap Liquidity Pool. Updatable in case pool in needs to be rotated.
ovenRegistryAddress: The address of the Kolibri Oven Registry. Required to support future Kolibri protocol upgrades
contractMetadata: Updatable to allow compliance with with emerging standards
tokenMetada: Updateable to allow compliance with emerging standards

Risks

Smart Contract Risk

This token contract is unaudited. If vulnerabilities are discovered, attackers may be able to drain kUSD from the contract.

Market Manipulation Attacks

The pool will blindly trade XTZ for kUSD at market rate on Quipuswap when the contract receives XTZ. Because of this, attackers may be able to manipulate exchange rates on Quipuswap to produce favorable trading conditions for themselves.

Interface

# Accept a number of XTZ and immediately swap them to kUSD.
default(unit)

# Liquidate an oven.
liquidate(address target)

# Deposit a number of tokens and receive LP tokens back.
deposit(nat numTokens)

# Redeem a number of LP tokens for underlying tokens.
redeem(nat numLpTokens)

# Update the contract's balance.
updateBalance(unit)

Building

# Pre-req install SmartPy (https://smartpy.io)

./compile.sh

Deployment

./compile.sh

export NODE_URL=https://rpctest.tzbeta.net

export QUIPUSWAP_ADDRESS=KT1MHhqWBK1aaCQdAQ1YLkuZyK8J1JJJBDuR
export GOVERNOR_ADDRESS=tz1hoverof3f2F8NAavUyTjbFBstZXTqnUMS
export OVEN_REGISTRY_ADDRESS=KT1AKDqitMnNYfhM24CsJmXQJM5mVEjn4zSa
export TOKEN_ADDRESS=KT1L8zmG4ZwibgJwJxYZGJsjJeM7VA8qWEao

export REWARD_PERCENT=1
export REWARD_LOCK_LEVEL=5

export SOURCE=tz1hoverof3f2F8NAavUyTjbFBstZXTqnUMS

export STORAGE="(Pair (Pair (Pair {} (Pair \"$GOVERNOR_ADDRESS\" {Elt \"\" 0x74657a6f732d73746f726167653a64617461; Elt \"data\" 0x7b20226e616d65223a2022517569707573776170204c69717569646174696e67206b555344222c2020226465736372697074696f6e223a20226b555344204c69717569646174696f6e20506f6f6c207469656420746f20517569707573776170222c202022617574686f7273223a205b22486f766572204c616273203c68656c6c6f40686f7665722e656e67696e656572696e673e225d2c202022686f6d6570616765223a20202268747470733a2f2f6b6f6c696272692e66696e616e636522207d})) (Pair (Pair \"$OVEN_REGISTRY_ADDRESS\" \"$QUIPUSWAP_ADDRESS\") (Pair $REWARD_LOCK_LEVEL 1))) (Pair (Pair (Pair None None) (Pair None None)) (Pair (Pair 0 \"$TOKEN_ADDRESS\") (Pair {Elt 0 (Pair 0 {Elt \"decimals\" 0x3138; Elt \"icon\" 0x2068747470733a2f2f6b6f6c696272692d646174612e73332e616d617a6f6e6177732e636f6d2f6c6f676f2e706e67; Elt \"name\" 0x517569707573776170204c69717569646174696e67206b555344; Elt \"symbol\" 0x514c6b555344})} 0))))"

tezos-client -E $NODE_URL originate contract liquidation_pool transferring 0 from $SOURCE running ./pool.tz --init $STORAGE --burn-cap 10

Hover-Labs/liquidity-pool