Zombie Interest

contracts/src/external/HyperdriveTarget0.sol

@@ -264,6 +264,7 @@ abstract contract HyperdriveTarget0 is
         IHyperdrive.PoolInfo memory poolInfo = IHyperdrive.PoolInfo({
             shareReserves: _marketState.shareReserves,
             shareAdjustment: _marketState.shareAdjustment,
+            zombieShareReserves: _marketState.zombieShareReserves,
             bondReserves: _marketState.bondReserves,
             sharePrice: sharePrice,
             longsOutstanding: _marketState.longsOutstanding,

contracts/src/interfaces/IHyperdrive.sol

@@ -101,6 +101,9 @@ interface IHyperdrive is IHyperdriveRead, IHyperdriveCore, IMultiToken {
         /// @dev The net amount of shares that have been added and removed from
         ///      the share reserves due to flat updates.
         int128 shareAdjustment;
+        /// @dev The amount shares that associated with positions that are matured,
+        ///      but not yet redeemed.
+        uint128 zombieShareReserves;
         /// @dev The global exposure of the pool due to open longs
         uint128 longExposure;
         /// @dev The amount of longs that are still open.
@@ -183,6 +186,9 @@ interface IHyperdrive is IHyperdriveRead, IHyperdriveCore, IMultiToken {
         ///      bonds. This is used to ensure that the pricing mechanism is
         ///      held invariant under flat updates for security reasons.
         int256 shareAdjustment;
+        // @dev The amount shares that associated with positions that are matured,
+        ///      but not yet redeemed.
+        uint256 zombieShareReserves;
         /// @dev The reserves of bonds held by the pool.
         uint256 bondReserves;
         /// @dev The total supply of LP shares.

contracts/src/internal/HyperdriveBase.sol

@@ -373,6 +373,28 @@ abstract contract HyperdriveBase is HyperdriveStorage {
         }
     }
 
+    /// @dev Collect the interest earned by closed positions
+    ///      that haven't been redeemed.
+    /// @param _amount The amount in shares that earned the zombie interest.
+    /// @param _oldSharePrice The share price at the time of the last checkpoint.
+    /// @param _newSharePrice The current share price.
+    function _collectZombieInterest(
+        uint256 _amount,
+        uint256 _oldSharePrice,
+        uint256 _newSharePrice
+    ) internal {
+        if (_newSharePrice > _oldSharePrice && _oldSharePrice > 0) {
+            // dz * (c1 - c0)/c1
+            uint256 zombieInterest = _amount.mulDivDown(
+                _newSharePrice - _oldSharePrice,
+                _newSharePrice
+            );
+            _marketState.zombieShareReserves -= zombieInterest.toUint128();
+            _marketState.shareReserves += zombieInterest.toUint128();
+            _marketState.shareAdjustment += int128(zombieInterest.toUint128());
+        }
+    }
+
     /// @dev Calculates the number of share reserves that are not reserved by
     ///      open positions.
     /// @param _sharePrice The current share price.

contracts/src/internal/HyperdriveCheckpoint.sol

@@ -84,6 +84,13 @@ abstract contract HyperdriveCheckpoint is
         // Create the share price checkpoint.
         checkpoint_.sharePrice = _sharePrice.toUint128();
 
+        // Collect the interest that has accrued since the last checkpoint.
+        _collectZombieInterest(
+            _marketState.zombieShareReserves,
+            _checkpoints[_checkpointTime - _checkpointDuration].sharePrice,
+            _sharePrice
+        );
+
         // Close out all of the short positions that matured at the beginning of
         // this checkpoint. This ensures that shorts don't continue to collect
         // free variable interest and that LP's can withdraw the proceeds of
@@ -117,6 +124,18 @@ abstract contract HyperdriveCheckpoint is
                 int256(shareProceeds), // keep the effective share reserves constant
                 _checkpointTime
             );
+            uint256 shareReservesDelta = maturedShortsAmount.divDown(
+                _sharePrice
+            );
+            uint256 proceeds = HyperdriveMath.calculateShortProceeds(
+                maturedShortsAmount,
+                shareReservesDelta,
+                openSharePrice,
+                _sharePrice,
+                _sharePrice,
+                _flatFee
+            );
+            _marketState.zombieShareReserves += proceeds.toUint128();
             positionsClosed = true;
         }
 
@@ -146,6 +165,7 @@ abstract contract HyperdriveCheckpoint is
                 int256(shareProceeds), // keep the effective share reserves constant
                 checkpointTime
             );
+            _marketState.zombieShareReserves += shareProceeds.toUint128();
             positionsClosed = true;
         }
 
@@ -189,15 +209,14 @@ abstract contract HyperdriveCheckpoint is
         return _sharePrice;
     }
 
-    /// @dev Calculates the proceeds of the long holders of a given position at
-    ///      maturity. The long holders will be the LPs if the position is a
-    ///      short.
+    /// @dev Calculates the proceeds of the holders of a given position at
+    ///      maturity.
     /// @param _bondAmount The bond amount of the position.
     /// @param _sharePrice The current share price.
     /// @param _openSharePrice The share price at the beginning of the
     ///        position's checkpoint.
     /// @param _isLong A flag indicating whether or not the position is a long.
-    /// @return shareProceeds The proceeds of the long holders in shares.
+    /// @return shareProceeds The proceeds of the holders in shares.
     /// @return governanceFee The fee paid to governance in shares.
     function _calculateMaturedProceeds(
         uint256 _bondAmount,

contracts/src/internal/HyperdriveLong.sol

@@ -199,6 +199,23 @@ abstract contract HyperdriveLong is HyperdriveLP {
 
             // Distribute the excess idle to the withdrawal pool.
             _distributeExcessIdle(sharePrice);
+        } else {
+            // The user is redeeming a long that has already matured. So we
+            // collect the interest that has accrued since the last checkpoint.
+            // NOTE: We only collect the interest on the position that is being closed.
+            uint256 checkpointTime = _latestCheckpoint();
+            _collectZombieInterest(
+                shareProceeds,
+                _checkpoints[checkpointTime].sharePrice,
+                sharePrice
+            );
+            uint256 zombieShareReserves = _marketState.zombieShareReserves;
+            if (shareProceeds < zombieShareReserves) {
+                zombieShareReserves -= shareProceeds;
+            } else {
+                zombieShareReserves = 0;
+            }
+            _marketState.zombieShareReserves = zombieShareReserves.toUint128();
         }
 
         // Withdraw the profit to the trader.

contracts/src/internal/HyperdriveShort.sol

@@ -165,9 +165,9 @@ abstract contract HyperdriveShort is HyperdriveLP {
         // If the position hasn't matured, apply the accounting updates that
         // result from closing the short to the reserves and pay out the
         // withdrawal pool if necessary.
-        uint256 bondAmount = _bondAmount; // Avoid stack too deep error.
         uint256 maturityTime = _maturityTime; // Avoid stack too deep error.
         uint256 sharePrice_ = sharePrice; // Avoid stack too deep error.
+        uint256 bondAmount = _bondAmount; // Avoid stack too deep error.
         if (block.timestamp < maturityTime) {
             // Attribute the governance fees.
             _governanceFeesAccrued += totalGovernanceFee;
@@ -202,6 +202,23 @@ abstract contract HyperdriveShort is HyperdriveLP {
 
             // Distribute the excess idle to the withdrawal pool.
             _distributeExcessIdle(sharePrice_);
+        } else {
+            // The user is redeeming a short that has already matured. So we
+            // collect the interest that has accrued since the last checkpoint.
+            // NOTE: We only collect the interest on the position that is being closed.
+            uint256 checkpointTime = _latestCheckpoint();
+            _collectZombieInterest(
+                shareProceeds,
+                _checkpoints[checkpointTime].sharePrice,
+                sharePrice
+            );
+            uint256 zombieShareReserves = _marketState.zombieShareReserves;
+            if (shareProceeds < zombieShareReserves) {
+                zombieShareReserves -= shareProceeds;
+            } else {
+                zombieShareReserves = 0;
+            }
+            _marketState.zombieShareReserves = zombieShareReserves.toUint128();
         }
 
         // Withdraw the profit to the trader. This includes the proceeds from

contracts/src/libraries/HyperdriveMath.sol

@@ -659,14 +659,12 @@ library HyperdriveMath {
         uint256 _flatFee
     ) internal pure returns (uint256 shareProceeds) {
         // If the interest is more negative than the trading profits and margin
-        // released, than the short proceeds are marked to zero. Otherwise, we
+        // released, then the short proceeds are marked to zero. Otherwise, we
         // calculate the proceeds as the sum of the trading proceeds, the
         // interest proceeds, and the margin released.
-        uint256 bondFactor = _bondAmount.mulDivDown(
-            _closeSharePrice,
-            // We round up here do avoid overestimating the share proceeds.
-            _openSharePrice.mulUp(_sharePrice)
-        );
+        uint256 bondFactor = _bondAmount
+            .mulDivDown(_closeSharePrice, _openSharePrice)
+            .divDown(_sharePrice);
 
         // We increase the bondFactor by the flat fee amount, because the trader
         // has provided the flat fee as margin, and so it must be returned to

crates/hyperdrive-math/src/lib.rs

@@ -56,6 +56,7 @@ impl Distribution<State> for Standard {
         let share_reserves = rng.gen_range(fixed!(1_000e18)..=fixed!(100_000_000e18));
         let info = PoolInfo {
             share_reserves: share_reserves.into(),
+            zombie_share_reserves: fixed!(0).into(),
             bond_reserves: rng
                 .gen_range(
                     share_reserves * FixedPoint::from(config.initial_share_price)

crates/test-utils/src/crash_reports.rs

@@ -108,6 +108,7 @@ impl From<RawPoolConfig> for PoolConfig {
 struct RawPoolInfo {
     share_reserves: u128,
     share_adjustment: i128,
+    zombie_share_reserves: u128,
     bond_reserves: u128,
     lp_total_supply: u128,
     share_price: u128,
@@ -126,6 +127,7 @@ impl From<RawPoolInfo> for PoolInfo {
         Self {
             share_reserves: r.share_reserves.into(),
             share_adjustment: r.share_adjustment.into(),
+            zombie_share_reserves: r.zombie_share_reserves.into(),
             bond_reserves: r.bond_reserves.into(),
             lp_total_supply: r.lp_total_supply.into(),
             share_price: r.share_price.into(),
@@ -300,6 +302,7 @@ mod tests {
     "raw_pool_info": {
         "shareReserves": 100000000000000000000000000,
         "shareAdjustment": 0,
+        "zombieShareReserves": 0,
         "bondReserves": 102178995195337961200000000,
         "lpTotalSupply": 99999990000000000000000000,
         "sharePrice": 1000000006341958396,
@@ -374,6 +377,7 @@ mod tests {
     "pool_info": {
         "shareReserves": "100000000.0",
         "shareAdjustment": "0.0",
+        "zombieShareReserves": "0.0",
         "bondReserves": "102178995.1953379612",
         "lpTotalSupply": "99999990.0",
         "sharePrice": "1.000000006341958396",
@@ -451,6 +455,7 @@ mod tests {
                 pool_info: PoolInfo {
                     share_reserves: uint256!(100000000000000000000000000),
                     share_adjustment: int256!(0),
+                    zombie_share_reserves: uint256!(0),
                     bond_reserves: uint256!(102178995195337961200000000),
                     lp_total_supply: uint256!(99999990000000000000000000),
                     share_price: uint256!(1000000006341958396),

test/integrations/hyperdrive/IntraCheckpointNettingTest.t.sol

@@ -10,6 +10,7 @@ import { HyperdriveTest } from "test/utils/HyperdriveTest.sol";
 import { HyperdriveUtils } from "test/utils/HyperdriveUtils.sol";
 import { Lib } from "test/utils/Lib.sol";
 
+
 contract IntraCheckpointNettingTest is HyperdriveTest {
     using FixedPointMath for uint256;
     using HyperdriveUtils for *;
@@ -595,6 +596,7 @@ contract IntraCheckpointNettingTest is HyperdriveTest {
         // longExposure should be 0
         IHyperdrive.PoolInfo memory poolInfo = hyperdrive.getPoolInfo();
         assertApproxEqAbs(poolInfo.longExposure, 0, 1);
+
         // idle should be equal to shareReserves
         uint256 expectedShareReserves = MockHyperdrive(address(hyperdrive))
             .calculateIdleShareReserves(hyperdrive.getPoolInfo().sharePrice) +
@@ -732,6 +734,7 @@ contract IntraCheckpointNettingTest is HyperdriveTest {
 
         // fast forward time and accrue interest
         advanceTime(POSITION_DURATION, variableInterest);
+        hyperdrive.checkpoint(HyperdriveUtils.latestCheckpoint(hyperdrive));
 
         // open positions
         uint256[] memory longMaturityTimes = new uint256[](numTrades);
@@ -764,7 +767,7 @@ contract IntraCheckpointNettingTest is HyperdriveTest {
         advanceTimeWithCheckpoints(timeElapsed, variableInterest);
 
         // remove liquidity
-        removeLiquidity(alice, aliceLpShares);
+        (, uint256 withdrawalShares) = removeLiquidity(alice, aliceLpShares);
 
         // Ensure all the positions have matured before trying to close them.
         IHyperdrive.PoolInfo memory poolInfo = hyperdrive.getPoolInfo();
@@ -783,6 +786,7 @@ contract IntraCheckpointNettingTest is HyperdriveTest {
             // close the long positions
             closeLong(bob, longMaturityTimes[i], bondAmounts[i]);
         }
+        redeemWithdrawalShares(alice, withdrawalShares);
 
         // longExposure should be 0
         poolInfo = hyperdrive.getPoolInfo();
@@ -807,11 +811,13 @@ contract IntraCheckpointNettingTest is HyperdriveTest {
         {
             uint256 apr = 0.05e18;
             deploy(alice, apr, initialSharePrice, 0, 0, 0);
+            // JR TODO: we should add this as a parameter to fuzz to ensure that we are solvent with withdrawal shares
             uint256 contribution = 500_000_000e18;
             aliceLpShares = initialize(alice, apr, contribution);
 
             // fast forward time and accrue interest
             advanceTime(POSITION_DURATION, variableInterest);
+            hyperdrive.checkpoint(HyperdriveUtils.latestCheckpoint(hyperdrive));
         }
 
         // open positions
@@ -852,6 +858,13 @@ contract IntraCheckpointNettingTest is HyperdriveTest {
             // close the long positions
             closeLong(bob, longMaturityTimes[i], bondAmounts[i]);
         }
+        poolInfo = hyperdrive.getPoolInfo();
+
+        // TODO: Enable this. It fails for test_netting_extreme_negative_interest_time_elapsed
+        // (uint256 withdrawalProceeds, ) = redeemWithdrawalShares(
+        //     alice,
+        //     withdrawalShares
+        // );
 
         // longExposure should be 0
         poolInfo = hyperdrive.getPoolInfo();