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0.7
Premia Finance Process Quality Review

Overview

This is a Premia Finance Process Quality Review completed on the 4th of November, 2021. It was performed using the Process Review process (version 0.7.3) and is documented here. The review was performed by Nick of DeFiSafety. Check out our Telegram.
The final score of the review is 47%, a FAIL. The breakdown of the scoring is in Scoring Appendix. For our purposes, a pass is 70%.

Summary of the Process

Very simply, the review looks for the following declarations from the developer's site. With these declarations, it is reasonable to trust the smart contracts.
  • Here are my smart contracts on the blockchain
  • Here is the documentation that explains what my smart contracts do
  • Here are the tests I ran to verify my smart contract
  • Here are the audit(s) performed on my code by third party experts
  • Here are the admin controls and strategies

Disclaimer

This report is for informational purposes only and does not constitute investment advice of any kind, nor does it constitute an offer to provide investment advisory or other services. Nothing in this report shall be considered a solicitation or offer to buy or sell any security, token, future, option or other financial instrument or to offer or provide any investment advice or service to any person in any jurisdiction. Nothing contained in this report constitutes investment advice or offers any opinion with respect to the suitability of any security, and the views expressed in this report should not be taken as advice to buy, sell or hold any security. The information in this report should not be relied upon for the purpose of investing. In preparing the information contained in this report, we have not taken into account the investment needs, objectives and financial circumstances of any particular investor. This information has no regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this information and investments discussed may not be suitable for all investors.
Any views expressed in this report by us were prepared based upon the information available to us at the time such views were written. The views expressed within this report are limited to DeFiSafety and the author and do not reflect those of any additional or third party and are strictly based upon DeFiSafety, its authors, interpretations and evaluation of relevant data. Changed or additional information could cause such views to change. All information is subject to possible correction. Information may quickly become unreliable for various reasons, including changes in market conditions or economic circumstances.
This completed report is copyright (c) DeFiSafety 2021. Permission is given to copy in whole, retaining this copyright label.

Chain

This section indicates the blockchains used by this protocol. This report covers all of the blockchains upon which the protocol is deployed.
Chain: Ethereum, Binance Smart Chain, Arbitrum
Guidance: Ethereum Binance Smart Chain Polygon Avalanche Terra Celo Arbitrum Solana

Code and Team

This section looks at the code deployed on the Mainnet that gets reviewed and its corresponding software repository. The document explaining these questions is here. This review will answer the following questions:
1) Are the executing code addresses readily available? (%) 2) Is the code actively being used? (%) 3) Is there a public software repository? (Y/N) 4) Is there a development history visible? (%) 5) Is the team public (not anonymous)? (Y/N)

1) Are the executing code addresses readily available? (%)

Answer: 100%
The executing code addresses are easily found in their docs, and in their repository.
Guidance: 100% Clearly labelled and on website, docs or repo, quick to find 70% Clearly labelled and on website, docs or repo but takes a bit of looking 40% Addresses in mainnet.json, in discord or sub graph, etc 20% Address found but labeling not clear or easy to find 0% Executing addresses could not be found

2) Is the code actively being used? (%)

Answer: 70%
Activity is more than 10 transactions a week on contract WETH-DAI Pool Proxy, as indicated in the Appendix.

Guidance:

100% More than 10 transactions a day 70% More than 10 transactions a week 40% More than 10 transactions a month 10% Less than 10 transactions a month 0% No activity

3) Is there a public software repository? (Y/N)

Answer: Yes
GitHub:
Is there a public software repository with the code at a minimum, but also normally test and scripts. Even if the repository was created just to hold the files and has just 1 transaction, it gets a "Yes". For teams with private repositories, this answer is "No".

4) Is there a development history visible? (%)

Answer: 100%
At 1693 commits, Premia clearly places a premium on development documentation practises.
This metric checks if the software repository demonstrates a strong steady history. This is normally demonstrated by commits, branches and releases in a software repository. A healthy history demonstrates a history of more than a month (at a minimum).
Guidance: 100% Any one of 100+ commits, 10+branches 70% Any one of 70+ commits, 7+branches 50% Any one of 50+ commits, 5+branches 30% Any one of 30+ commits, 3+branches 0% Less than 2 branches or less than 30 commits

5) Is the team public (not anonymous)? (Y/N)

Answer: Yes
For a "Yes" in this question, the real names of some team members must be public on the website or other documentation (LinkedIn, etc). If the team is anonymous, then this question is a "No".

Documentation

This section looks at the software documentation. The document explaining these questions is here.
Required questions are;
6) Is there a whitepaper? (Y/N) 7) Are the basic software functions documented? (Y/N) 8) Does the software function documentation fully (100%) cover the deployed contracts? (%) 9) Are there sufficiently detailed comments for all functions within the deployed contract code (%) 10) Is it possible to trace from software documentation to the implementation in code (%)

6) Is there a whitepaper? (Y/N)

Answer: Yes

7) Are the basic software functions documented? (Y/N)

Answer: No
Software functions are not covered by Premia documentation.

How to improve this score:

Write the document based on the deployed code. For guidance, refer to the SecurEth System Description Document.

8) Does the software function documentation fully (100%) cover the deployed contracts? (%)

Answer: 0%
There is no software function documentation that covers the deployed contracts.
Guidance:
100% All contracts and functions documented 80% Only the major functions documented 79-1% Estimate of the level of software documentation 0% No software documentation

How to improve this score:

This score can be improved by adding content to the software functions document such that it comprehensively covers the requirements. For guidance, refer to the SecurEth System Description Document. Using tools that aid traceability detection will help.

9) Are there sufficiently detailed comments for all functions within the deployed contract code (%)

Answer: 32%
Code examples are in the Appendix. As per the SLOC, there is ___% commenting to code (CtC).
The Comments to Code (CtC) ratio is the primary metric for this score.
Guidance: 100% CtC > 100 Useful comments consistently on all code 90-70% CtC > 70 Useful comment on most code 60-20% CtC > 20 Some useful commenting 0% CtC < 20 No useful commenting

How to improve this score

This score can improve by adding comments to the deployed code such that it comprehensively covers the code. For guidance, refer to the SecurEth Software Requirements.

10) Is it possible to trace from software documentation to the implementation in code (%)

Answer: 40%
The documentation lists the functions and describes them in a non explicit or non traceable way.
Guidance: 100% Clear explicit traceability between code and documentation at a requirement level for all code 60% Clear association between code and documents via non explicit traceability 40% Documentation lists all the functions and describes their functions 0% No connection between documentation and code

How to improve this score:

This score can improve by adding traceability from documentation to code such that it is clear where each outlined function is coded in the source code. For reference, check the SecurEth guidelines on traceability.

Testing

This section looks at the software testing available. It is explained in this document. This section answers the following questions;
11) Full test suite (Covers all the deployed code) (%) 12) Code coverage (Covers all the deployed lines of code, or explains misses) (%) 13) Scripts and instructions to run the tests (Y/N) 14) Report of the results (%) 15) Formal Verification test done (%) 16) Stress Testing environment (%)

11) Is there a Full test suite? (%)

Answer: 100%
Code examples are in the Appendix. As per the SLOC, there is 669% testing to code (TtC).
This score is guided by the Test to Code ratio (TtC). Generally a good test to code ratio is over 100%. However the reviewers best judgement is the final deciding factor.
Guidance: 100% TtC > 120% Both unit and system test visible 80% TtC > 80% Both unit and system test visible 40% TtC < 80% Some tests visible 0% No tests obvious

12) Code coverage (Covers all the deployed lines of code, or explains misses) (%)

Answer: 50%
While there is no code coverage report, at 669% it is clear that this protocol has undergone rigorous, deep, hard and full bodied testing with every part of this protocol being fully examined.
Guidance: 100% Documented full coverage 99-51% Value of test coverage from documented results 50% No indication of code coverage but clearly there is a reasonably complete set of tests 30% Some tests evident but not complete 0% No test for coverage seen

How to improve this score:

This score can improved by adding tests that achieve full code coverage. A clear report and scripts in the software repository will guarantee a high score.

13) Scripts and instructions to run the tests (Y/N)

Answer: Yes

14) Report of the results (%)

Answer: 0%
No test report was found.
Guidance: 100% Detailed test report as described below 70% GitHub code coverage report visible 0% No test report evident

How to improve this score

Add a report with the results. The test scripts should generate the report or elements of it.

15) Formal Verification test done (%)

Answer: 0%
No documented formal verification was found.

16) Stress Testing environment (%)

Answer: 100%
Premia conducted a trading contest on a testnet. This effort should be commended: few protocols have provided such detailed breakdowns of the results!

Security

This section looks at the 3rd party software audits done. It is explained in this document. This section answers the following questions;
17) Did 3rd Party audits take place? (%) 18) Is the bounty value acceptably high?

17) Did 3rd Party audits take place? (%)

Answer: 20%
Premia's initial deployment has been audited. However, since V2 deployed 3 weeks ago and this remains unaudited we cannot award points for this older version.
Guidance: 100% Multiple Audits performed before deployment and results public and implemented or not required 90% Single audit performed before deployment and results public and implemented or not required 70% Audit(s) performed after deployment and no changes required. Audit report is public
50% Audit(s) performed after deployment and changes needed but not implemented 20% No audit performed 0% Audit Performed after deployment, existence is public, report is not public and no improvements deployed OR smart contract address' not found, (where question 1 is 0%)
Deduct 25% if code is in a private repo and no note from auditors that audit is applicable to deployed code

18) Is the bounty value acceptably high (%)

Answer: 0%
No bug bounty program is documented.
Guidance:
100% Bounty is 10% TVL or at least $1M AND active program (see below) 90% Bounty is 5% TVL or at least 500k AND active program 80% Bounty is 5% TVL or at least 500k 70% Bounty is 100k or over AND active program 60% Bounty is 100k or over 50% Bounty is 50k or over AND active program 40% Bounty is 50k or over 20% Bug bounty program bounty is less than 50k 0% No bug bounty program offered
An active program means that a third party (such as Immunefi) is actively driving hackers to the site. An inactive program would be static mentions on the docs.

Access Controls

This section covers the documentation of special access controls for a DeFi protocol. The admin access controls are the contracts that allow updating contracts or coefficients in the protocol. Since these contracts can allow the protocol admins to "change the rules", complete disclosure of capabilities is vital for user's transparency. It is explained in this document. The questions this section asks are as follow;
19) Can a user clearly and quickly find the status of the admin controls? 20) Is the information clear and complete? 21) Is the information in non-technical terms that pertain to the investments? 22) Is there Pause Control documentation including records of tests?

19) Can a user clearly and quickly find the status of the access controls (%)

Answer: 100%
Governance information can easily be found.
Guidance: 100% Clearly labelled and on website, docs or repo, quick to find 70% Clearly labelled and on website, docs or repo but takes a bit of looking 40% Access control docs in multiple places and not well labelled 20% Access control docs in multiple places and not labelled 0% Admin Control information could not be found

20) Is the information clear and complete (%)

Answer: 15%
a) All contracts are clearly labelled as upgradeable (or not) -- 0% -- no contracts are labelled as upgradeable b) The type of ownership is clearly indicated (OnlyOwner / MultiSig / Defined Roles) -- 15% -- governance is in control of the direction of the protocol, but it is unclear if the votes are binding. c) The capabilities for change in the contracts are described -- 0% -- contract change capability is not described.
Guidance: All the contracts are immutable -- 100% OR
a) All contracts are clearly labelled as upgradeable (or not) -- 30% AND b) The type of ownership is clearly indicated (OnlyOwner / MultiSig / Defined Roles) -- 30% AND c) The capabilities for change in the contracts are described -- 30%

How to improve this score:

Create a document that covers the items described above. An example is enclosed.

21) Is the information in non-technical terms that pertain to the investments (%)

Answer: 90%
This information is in clear and easily comprensible information.
Guidance: 100% All the contracts are immutable 90% Description relates to investments safety and updates in clear, complete non-software l language 30% Description all in software specific language 0% No admin control information could not be found

22) Is there Pause Control documentation including records of tests (%)

Answer: 0%
No pause guardian was documented.
Guidance: 100% All the contracts are immutable or no pause control needed and this is explained OR 100% Pause control(s) are clearly documented and there is records of at least one test within 3 months 80% Pause control(s) explained clearly but no evidence of regular tests 40% Pause controls mentioned with no detail on capability or tests 0% Pause control not documented or explained

How to improve this score:

Create a document that covers the items described above in plain language that investors can understand. An example is enclosed.

Appendices

Author Details

The author of this review is Rex of DeFi Safety.
Email : [email protected] Twitter : @defisafety
I started with Ethereum just before the DAO and that was a wonderful education. It showed the importance of code quality. The second Parity hack also showed the importance of good process. Here my aviation background offers some value. Aerospace knows how to make reliable code using quality processes.
I was coaxed to go to EthDenver 2018 and there I started SecuEth.org with Bryant and Roman. We created guidelines on good processes for blockchain code development. We got EthFoundation funding to assist in their development.
Process Quality Reviews are an extension of the SecurEth guidelines that will further increase the quality processes in Solidity and Vyper development.
DeFiSafety is my full time gig and we are working on funding vehicles for a permanent staff.

Scoring Appendix

Executing Code Appendix

Code Used Appendix

Example Code Appendix

1
pragma solidity ^0.8.0;
2
3
import {AggregatorInterface} from "@chainlink/contracts/src/v0.8/interfaces/AggregatorInterface.sol";
4
import {AggregatorV3Interface} from "@chainlink/contracts/src/v0.8/interfaces/AggregatorV3Interface.sol";
5
import {EnumerableSet, ERC1155EnumerableStorage} from "@solidstate/contracts/token/ERC1155/enumerable/ERC1155EnumerableStorage.sol";
6
7
import {ABDKMath64x64} from "abdk-libraries-solidity/ABDKMath64x64.sol";
8
import {ABDKMath64x64Token} from "../libraries/ABDKMath64x64Token.sol";
9
import {OptionMath} from "../libraries/OptionMath.sol";
10
11
library PoolStorage {
12
using ABDKMath64x64 for int128;
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using PoolStorage for PoolStorage.Layout;
14
15
enum TokenType {
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UNDERLYING_FREE_LIQ,
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BASE_FREE_LIQ,
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UNDERLYING_RESERVED_LIQ,
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BASE_RESERVED_LIQ,
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LONG_CALL,
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SHORT_CALL,
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LONG_PUT,
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SHORT_PUT
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}
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struct PoolSettings {
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address underlying;
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address base;
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address underlyingOracle;
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address baseOracle;
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}
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struct QuoteArgsInternal {
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address feePayer; // address of the fee payer
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uint64 maturity; // timestamp of option maturity
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int128 strike64x64; // 64x64 fixed point representation of strike price
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int128 spot64x64; // 64x64 fixed point representation of spot price
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uint256 contractSize; // size of option contract
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bool isCall; // true for call, false for put
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}
41
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struct QuoteResultInternal {
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int128 baseCost64x64; // 64x64 fixed point representation of option cost denominated in underlying currency (without fee)
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int128 feeCost64x64; // 64x64 fixed point representation of option fee cost denominated in underlying currency for call, or base currency for put
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int128 cLevel64x64; // 64x64 fixed point representation of C-Level of Pool after purchase
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int128 slippageCoefficient64x64; // 64x64 fixed point representation of slippage coefficient for given order size
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}
48
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struct BatchData {
50
uint256 eta;
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uint256 totalPendingDeposits;
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}
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bytes32 internal constant STORAGE_SLOT =
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keccak256("premia.contracts.storage.Pool");
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uint256 private constant C_DECAY_BUFFER = 12 hours;
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uint256 private constant C_DECAY_INTERVAL = 4 hours;
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struct Layout {
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// ERC20 token addresses
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address base;
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address underlying;
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// AggregatorV3Interface oracle addresses
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address baseOracle;
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address underlyingOracle;
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// token metadata
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uint8 underlyingDecimals;
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uint8 baseDecimals;
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// minimum amounts
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uint256 baseMinimum;
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uint256 underlyingMinimum;
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// deposit caps
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uint256 basePoolCap;
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uint256 underlyingPoolCap;
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// market state
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int128 _deprecated_steepness64x64;
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int128 cLevelBase64x64;
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int128 cLevelUnderlying64x64;
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uint256 cLevelBaseUpdatedAt;
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uint256 cLevelUnderlyingUpdatedAt;
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uint256 updatedAt;
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// User -> isCall -> depositedAt
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mapping(address => mapping(bool => uint256)) depositedAt;
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mapping(address => mapping(bool => uint256)) divestmentTimestamps;
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// doubly linked list of free liquidity intervals
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// isCall -> User -> User
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mapping(bool => mapping(address => address)) liquidityQueueAscending;
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mapping(bool => mapping(address => address)) liquidityQueueDescending;
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// minimum resolution price bucket => price
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mapping(uint256 => int128) bucketPrices64x64;
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// sequence id (minimum resolution price bucket / 256) => price update sequence
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mapping(uint256 => uint256) priceUpdateSequences;
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// isCall -> batch data
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mapping(bool => BatchData) nextDeposits;
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// user -> batch timestamp -> isCall -> pending amount
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mapping(address => mapping(uint256 => mapping(bool => uint256))) pendingDeposits;
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EnumerableSet.UintSet tokenIds;
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// user -> isCallPool -> total value locked of user (Used for liquidity mining)
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mapping(address => mapping(bool => uint256)) userTVL;
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// isCallPool -> total value locked
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mapping(bool => uint256) totalTVL;
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// steepness values
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int128 steepnessBase64x64;
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int128 steepnessUnderlying64x64;
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}
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function layout() internal pure returns (Layout storage l) {
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bytes32 slot = STORAGE_SLOT;
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assembly {
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l.slot := slot
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}
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}
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/*
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* @notice calculate ERC1155 token id for given option parameters
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* @param tokenType TokenType enum
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* @param maturity timestamp of option maturity
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* @param strike64x64 64x64 fixed point representation of strike price
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* @return tokenId token id
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*/
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function formatTokenId(
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TokenType tokenType,
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uint64 maturity,
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int128 strike64x64
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) internal pure returns (uint256 tokenId) {
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tokenId =
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(uint256(tokenType) << 248) +
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(uint256(maturity) << 128) +
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uint256(int256(strike64x64));
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}
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/*
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* @notice derive option maturity and strike price from ERC1155 token id
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* @param tokenId token id
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* @return tokenType TokenType enum
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* @return maturity timestamp of option maturity
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* @return strike64x64 option strike price
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*/
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function parseTokenId(uint256 tokenId)
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internal
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pure
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returns (
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TokenType tokenType,
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uint64 maturity,
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int128 strike64x64
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)
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{
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assembly {
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tokenType := shr(248, tokenId)
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maturity := shr(128, tokenId)
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strike64x64 := tokenId
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}
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}
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function getTokenDecimals(Layout storage l, bool isCall)
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internal
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view
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returns (uint8 decimals)
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{
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decimals = isCall ? l.underlyingDecimals : l.baseDecimals;
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}
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/**
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* @notice get the total supply of free liquidity tokens, minus pending deposits
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* @param l storage layout struct
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* @param isCall whether query is for call or put pool
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* @return 64x64 fixed point representation of total free liquidity
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*/
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function totalFreeLiquiditySupply64x64(Layout storage l, bool isCall)
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internal
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view
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returns (int128)
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{
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uint256 tokenId = formatTokenId(
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isCall ? TokenType.UNDERLYING_FREE_LIQ : TokenType.BASE_FREE_LIQ,
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0,
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0
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);
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return
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ABDKMath64x64Token.fromDecimals(
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ERC1155EnumerableStorage.layout().totalSupply[tokenId] -
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l.nextDeposits[isCall].totalPendingDeposits,
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l.getTokenDecimals(isCall)
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);
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}
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function getReinvestmentStatus(
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Layout storage l,
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address account,
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bool isCallPool
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) internal view returns (bool) {
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uint256 timestamp = l.divestmentTimestamps[account][isCallPool];
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return timestamp == 0 || timestamp > block.timestamp;
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}
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function addUnderwriter(
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Layout storage l,
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address account,
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bool isCallPool
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) internal {
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require(account != address(0));
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mapping(address => address) storage asc = l.liquidityQueueAscending[
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isCallPool
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];
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mapping(address => address) storage desc = l.liquidityQueueDescending[
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isCallPool
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];
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if (_isInQueue(account, asc, desc)) return;
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address last = desc[address(0)];
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asc[last] = account;
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desc[account] = last;
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desc[address(0)] = account;
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}
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SLOC Appendix

Solidity Contracts

Language
Files
Lines
Blanks
Comments
Code
Complexity
Solidity
14
1300
247
254
799
74
Comments to Code 254/799 = 32%

Typescript Tests

Language
Files
Lines
Blanks
Comments
Code
Complexity
TypeScript
17
6389
939
106
5344
477
Tests to Code 5344/799 = 669%
Last modified 5d ago