C4 underwater fixes

contracts/collateral/OverlayV1OVLCollateral.sol

@@ -236,7 +236,7 @@ contract OverlayV1OVLCollateral is ERC1155Supply {
 
     /**
       @notice Build a position on Overlay with OVL collateral
-      @dev This interacts with an Overlay Market to register oi and hold 
+      @dev This interacts with an Overlay Market to register oi and hold
       positions on behalf of users.
       @dev Build event emitted
       @param _market The address of the desired market to interact with
@@ -336,14 +336,18 @@ contract OverlayV1OVLCollateral is ERC1155Supply {
 
         emit Unwind(pos.market, _positionId, _userOi, _userDebt);
 
-        // TODO: think through edge case of underwater position ... and fee adjustments ...
         uint _feeAmount = _userNotional.mulUp(mothership.fee());
 
         uint _userValueAdjusted = _userNotional - _feeAmount;
-        if (_userValueAdjusted > _userDebt) _userValueAdjusted -= _userDebt;
-        else _userValueAdjusted = 0;
+        if (_userValueAdjusted > _userDebt) {
+            _userValueAdjusted -= _userDebt;
+        } else {
+            // underwater position set to zero value with fees lowered appropriately
+            _userValueAdjusted = 0;
+            _feeAmount = _userNotional > _userDebt ? _userNotional - _userDebt : 0;
+        }
 
-        fees += _feeAmount; // adds to fee pot, which is transferred on update
+        fees += _feeAmount; // adds to fee pot, which is transferred on disburse
 
         pos.debt -= _userDebt;
         pos.cost -= _userCost;
@@ -355,16 +359,16 @@ contract OverlayV1OVLCollateral is ERC1155Supply {
         if (_userCost < _userValueAdjusted) {
 
             ovl.transferMint(
-                msg.sender, 
-                _userCost, 
+                msg.sender,
+                _userCost,
                 _userValueAdjusted - _userCost
             );
 
         } else {
 
             ovl.transferBurn(
-                msg.sender, 
-                _userValueAdjusted, 
+                msg.sender,
+                _userValueAdjusted,
                 _userCost - _userValueAdjusted
             );
 

contracts/libraries/Position.sol

@@ -79,7 +79,7 @@ library Position {
         bool _long = _self.isLong;
 
         if (_long) isUnder = __oi.mulDown(priceFrame) < _self.debt;
-        else isUnder = __oi.mulDown(priceFrame) + _self.debt < ( __oi * 2 );
+        else isUnder = __oi.mulDown(priceFrame) + _self.debt > ( __oi * 2 );
 
     }
 

tests/markets/collateral/ovl/test_unwind.py

@@ -208,6 +208,9 @@ def test_unwind_expected_fee(
     notional = val + debt_pos
 
     fee = notional * (mothership.fee() / 1e18)
+    if notional - debt_pos < fee:
+        # lower fee is position is underwater (value < 0)
+        fee = notional - debt_pos
 
     fees_now = ovl_collateral.fees() / 1e18
 
@@ -467,10 +470,11 @@ def test_unwind_pnl_mint_burn(
 
     (oi, oi_shares, price_frame) = market.positionInfo(is_long, price_point)
 
-    # Unwind position
-
+    # State prior to unwind
     exit_price_ix = market.pricePointNextIndex()
+    fees_prior = ovl_collateral.fees()
 
+    # Unwind position
     tx_unwind = ovl_collateral.unwind(
         pid,
         bob_balance,
@@ -498,18 +502,21 @@ def test_unwind_pnl_mint_burn(
         val = oi_pos * 2
         val = val - min(val, debt_pos + oi_pos * price_frame)
 
-    notional = val + debt_pos
-
-    fee = notional * (mothership.fee() / 1e18)
-
     # Other metrics
     debt = bob_balance * (debt_pos/total_pos_shares)
     cost = bob_balance * (cost_pos/total_pos_shares)
 
-    value_adjusted = notional - fee
+    notional = val + debt
 
-    value_adjusted = value_adjusted - debt if value_adjusted > debt else 0
+    # divide by 1e18 since mothership.fee() is a fraction
+    fee = notional * (mothership.fee() / 1e18)
 
+    value_adjusted = notional - debt - fee
+    if notional - debt < fee:
+        value_adjusted = 0
+        fee = notional - debt if notional > debt else 0
+
+    # check expected pnl matches actual
     exp_pnl = value_adjusted - cost
 
     for _, v in enumerate(tx_unwind.events['Transfer']):
@@ -519,3 +526,7 @@ def test_unwind_pnl_mint_burn(
             act_pnl = v['value']
 
     assert exp_pnl == approx(act_pnl)
+
+    # check fees added
+    fees_now = ovl_collateral.fees()
+    assert fee + fees_prior == approx(fees_now)

tests/markets/conftest.py

@@ -17,6 +17,7 @@
 PRICE_POINTS_START = 50
 PRICE_POINTS_END = 100
 
+
 PRICE_WINDOW_MACRO = 3600
 PRICE_WINDOW_MICRO = 600
 
@@ -165,12 +166,12 @@ def feed_infos():
     depth_path = '../../feeds/univ3_axs_weth'
 
     raw_uni_framed_market_path = os.path.join(base,
-                                              market_path +
-                                              '_raw_uni_framed.json')
+                                              market_path
+                                              + '_raw_uni_framed.json')
     reflected_market_path = os.path.join(base, market_path + '_reflected.json')
     raw_uni_framed_depth_path = os.path.join(base,
-                                             depth_path +
-                                             '_raw_uni_framed.json')
+                                             depth_path
+                                             + '_raw_uni_framed.json')
     reflected_depth_path = os.path.join(base, depth_path + '_reflected.json')
 
     with open(os.path.normpath(raw_uni_framed_market_path)) as f: