BIP-X: Misc Improvements

[nickkatsios]

BIP-X: Misc. Improvements

Proposer

Beanstalk Farms, Brendan Sanderson, Ben Weintraub

Proposer Wallet: TBD

Summary

• Migrate the Fertilizer metadata hosted at fert.bean.money on-chain;
• When $\Delta B_{\overline{t-1}} < 0$, change Soil issued at gm to be the minimum of (1) $-\Delta B$ calculated using the instantaneous reserves from Multi Flow and (2) $-\Delta B_{\overline{t-1}}$;
• Implement an Anti λ → λ Convert type that allows any user to decrease a Deposit's BDV if the Recorded BDV (the BDV stored on-chain with the Deposit) is greater than the Current BDV (the number of tokens in the Deposit × the current BDV of the token);
• Change the Chop Rate calculation from the [% recapitalized × % of Sprouts that have become Rinsable] to the [% recapitalized]^2;
• Update the Locked Beans calculation to account for the change to the Chop Rate; and
• Decrease the recapitalization amount upon Chop per BIR-14.

Links

• BIP-X GitHub PR
• GitHub Commit Hash: TBD
• Safe Transaction TBD

Problem

Currently, Fertilizer metadata is currently hosted on centralized infrastructure. This includes the SVG, the traits, etc. Any data hosted on centralized infrastructure requires maintenance and is subject to downtime.

Beanstalk is prone to overissuing Soil at gm call because Soil issuance below peg is solely based on $-\Delta B_{\overline{t-1}}$.

Currently, the Recorded BDV of a Deposit is not necessarily equal to its Current BDV. For example, if a user Deposits BEANETH into the Silo and the USD price of ETH falls significantly (and thus the BDV of BEANETH decreases), the Recorded BDV does not decrease, i.e., the user “locked in” the higher BDV at the time of Deposit. In practice, this may mean Beanstalk is over crediting BDV to Deposits relative to their value to the system. Beanstalk only supports Convert types that do not decrease the BDV of the Deposit.

Currently, Beanstalk offers a conservative Chop Rate of ~1.03% (22.49% recapitalization * 4.5627% of debt repaid to Fertilizer) to Unripe holders. Although the current model is likely to result in the least volatility as Beanstalk is recapitalized (as a result of Unripe holders Chopping later on average), Beanstalk can be more aggressive given its healthy position in terms of liquidity. Chopping is healthy for Beanstalk as its obligations and the amount needed to fully recapitalize Unripe assets decreases.

Locked Beans are conservatively calculated under the assumption that all Unripe LP is Chopped within a single Season.

Currently, when Unripe LP holders Chop, s.recapitalized is unchanged as demonstrated in BIR-14. As a result, the Barn Raise ends earlier than intended, i.e., Beanstalk will not sell enough Fertilizer to fully recapitalize all Unripe LP.

Proposed Solution

On-Chain Fert Metadata

We propose to migrate the Fertilizer metadata hosted at fert.bean.money on-chain.

Specification

• Create a new contract called FertilizerImage.sol to dynamically and efficiently assemble the SVG image for Active, Used and Available fertilizer; and
• Modify uri in Internalizer.sol to (1) assemble the required on-chain data, (2) generate the correct Fertilizer image URI using imageUri from FertilizerImage.sol and (3) return the final metadata URI to be consumed.

Soil Issuance Update

We propose to change Soil issued at gm when $\Delta B_{\overline{t-1}} < 0$ to be the minimum of (1) $-\Delta B$ calculated using the instantaneous reserves from Multi Flow and (2) $-\Delta B_{\overline{t-1}}$.

Specification

In SeasonFacet/Sun.sol:

• Implement setSoilBelowPeg, which calculates the cumulative deltaB across all whitelisted Wells using the instantaneous reserves in Multi Flow, compares it to its time weighted counterpart and picks the minimum of those two values; and
• Update the P < 1 case in stepSun to use setSoilBelowPeg.

BDV Decrease

Implement a new ANTI_LAMBDA_LAMBDA Convert type, callable by anyone, that Converts on behalf of a user and can decrease a Deposit's BDV.

Specification

• Add an additional parameter account in LibConvert.convert(…);
• Add to the return parameters a decreaseBDV boolean representing whether the Convert type should decrease BDV or not;
• Add the ANTI_LAMBDA_LAMBDA Convert case to the convert ladder in LibConvert;
• Reorder the Convert ladder in LibConvert so that more frequenly used Converts appear first;
• To conform with previous convertData types, update them return 0, and add a check that uses msg.sender instead of account when applicable;
• In ConvertFacet.convert(), replace msg.sender in other Convert helper functions with account;
• Check if the ANTI_LAMBDA_LAMBDA convert is called in ConvertFacet.convert(), and when it is, update the input Deposit with the current BDV; and
• Pack all convert properties in a struct called convertParams in LibConvert for code readability and extensibility.

Chop Changes

We propose to:

• Change the Chop Rate calculation from the [% recapitalized × % of Sprouts that have become Rinsable] to the [% recapitalized]^2;
• Update the Locked Beans calculation to account for the change to the Chop Rate; and
• Decrease the recapitalization amount upon Chop per BIR-14.

Specification

Chop rate change:

• Remove LibUnripe.getRecapPaidPercentAmount() (the percentage paid back to Fertilizer holders) from the Chop Rate calculation;
• Update LibUnripe.getPenalizedUnderlying() to calculate the Unripe λ → λ Conversion using the new formula;
• Isolate the calculation to get the dollar amount needed for recapitalization to a new function called LibFertilizer.getTotalRecapDollarsNeeded();
• Implement getTotalRecapitalizedPercent() to get the US dollar percentage recapitalized by Beanstalk;
• Update getLockedBeansUnderlyingUnripeBean() to account for the percent recapitalized percentage instead of the amount paid back to Fertilizer;
• Refactor LibChop.chop() to use LibUnripe.removeUnderlying() instead of LibUnripe.decrementUnderlying() when decreasing the available Ripe underlying amount for the Unripe token after a Chop.

Technical Rationale

The Fertilizer Facet must be updated due to changes to the ERC-1155 token metadata. Hosting the metadata on-chain instead of on centralized infrastructure eliminates any risks associated with uptime.

The Unripe Facet must be updated due to changes to the chop function.

The Convert Facet must be updated due to the introduction of ANTI_LAMBDA_LAMBDA.

The Season Facet must be updated due to changes to the deltaB calculation introduced by the Soil issuance change below peg.

Economic Rationale

Soil Issuance Update

Consider an example where Beanstalk is at -300k deltaB for the first 58 minutes of a Season. At the 58th minute, i.e., 10 blocks before the next gm call, a Farmer buys and Sows 200k Beans, bringing the current deltaB to -100k.

Assuming no other trades in the final 2 minutes of the Season, the Soil issued at gm will be slightly less than 300k, despite Beanstalk only needing 100k Beans to be bought to return to peg. Before Multi Flow, this was necessary for sufficient manipulation resistance.

In general, Beanstalk does not need to be particularly aggressive when issuing Soil—it does not want to issue debt if it doesn't have to.

Thus, using the inter-block MEV manipulation resistant instantaneous reserves in Multi Flow to calculate deltaB below peg is ideal.

BDV Decrease

The ability to decrease a Deposit's BDV is necessary to prevent Beanstalk from over crediting BDV to Deposits relative to their value to the system. There is no incentive for a Farmer to decrease their own BDV. Thus, the Anti λ → λ Convert is callable by any user. There may be sufficient incentive for someone to call Anti λ → λ Convert on a Farmer's Deposit to increase their own Stalk ownership.

Chop Changes

Beanstalk can be more aggressive given its healthy position in terms of liquidity. Chopping is healthy for Beanstalk as its obligations and the amount needed to fully recapitalize Unripe assets decreases.

The Locked Beans calculation must be updated to account for the new Chop Rate calculation.

Ensuring the chop function is implemented as intended is essential to the structure of the Barn approved by the DAO.

Contract Changes

Initialization Contract

The init function on the following TBD contract is called:

• TBD

Fertilizer Facet

The following FertilizerFacet is removed from Beanstalk:

• TBD

The following FertilizerFacet is added to Beanstalk:

• TBD

FertilizerFacet Function Changes

Name	Selector	Action	Type	New Functionality
balanceOfBatchFertilizer	0x304ec65d	Replace	View
balanceOfFertilized	0xb6f42085	Replace	View
balanceOfFertilizer	0x1799b3b2	Replace	View
balanceOfUnfertilized	0x1edb6be1	Replace	View
beansPerFertilizer	0x9bb4e35a	Replace	View
getActiveFertilizer	0xdc6ba285	Replace	View
getBarnRaiseWell	TBD	Replace	View
getBarnRaiseToken	TBD	Replace	View
getCurrentHumidity	0x39448802	Replace	View
getEndBpf	0xc85951a1	Replace	View
getFertilizer	0x9c45a1d5	Replace	View
getFertilizers	0x34af5416	Replace	View
getFirst	0x1e223143	Replace	View
getHumidity	0x29130a66	Replace	View
getLast	0x4d622831	Replace	View
getMintFertilizerOut	0x69744dd0	Replace	View
getNext	0xf4a057e2	Replace	View
getTotalRecapDollarsNeeded	TBD	Add	View	✓
isFertilizing	0x6ae1c014	Replace	View
remainingRecapitalization	0x4a16607c	Replace	View
totalFertilizedBeans	0x4f9a9678	Replace	View
totalFertilizerBeans	0xf9c4ebde	Replace	View
totalUnfertilizedBeans	0xa3ef48c9	Replace	View
beginBarnRaiseMigration	TBD	Replace	Call
claimFertilized	0x83e08888	Replace	Call
mintFertilizer	0xbb02e10b	Replace	Call
payFertilizer	0xd47aee59	Replace	Call

Unripe Facet

The following UnripeFacet is removed from Beanstalk:

• TBD

The following UnripeFacet is added to Beanstalk:

• TBD

UnripeFacet Function Changes

Name	Selector	Action	Type	New Functionality
_getPenalizedUnderlying	0xa84643e4	Remove	View
balanceOfPenalizedUnderlying	0x1acc0a47	Replace	View
balanceOfUnderlying	0x1be655e8	Replace	View
getLockedBeans	0x087d78b4	Replace	View
getLockedBeansFromTwaReserves	0x7caa025f	Replace	View
getLockedBeansUnderlyingUnripeBean	0xbfe2f3be	Replace	View	✓
getLockedBeansUnderlyingUnripeLP	TBD	Replace	View
getPenalizedUnderlying	0x6de45df2	Replace	View
getPenalty	0x014a8a49	Replace	View
getPercentPenalty	0xbb7de478	Replace	View	✓
getRecapFundedPercent	0x43cc4ee0	Replace	View
getRecapitalized	TBD	Add	View	✓
getRecapPaidPercent	0xab434eb7	Replace	View
getTotalUnderlying	0xadef4533	Replace	View
getUnderlying	0x9f06b3fa	Replace	View
getUnderlyingPerUnripeToken	0xb8a04d1b	Replace	View
getUnderlyingToken	0x691bcc88	Replace	View
isUnripe	0xfc6a19df	Replace	View
picked	0xd3c73ec8	Replace	View
addMigratedUnderlying	0x787cee99	Replace	Call
addUnripeToken	0xfa345569	Replace	Call
chop	0x9a516cad	Replace	Call
pick	0x13ed3cea	Replace	Call
switchUnderlyingToken	0xa33fa99f	Replace	Call

Convert Facet

The following ConvertFacet is removed from Beanstalk:

• TBD

The following ConvertFacet is added to Beanstalk:

• TBD

ConvertFacet Function Changes

Name	Selector	Action	Type	New Functionality
convert	0xb362a6e8	Replace	Call	✓

Season Facet

The following SeasonFacet is removed from Beanstalk:

• TBD

The following SeasonFacet is added to Beanstalk:

• TBD

SeasonFacet Function Changes

Name	Selector	Action	Type	New Functionality
seasonTime	0xca7b7d7b	Replace	View
gm	0x64ee4b80	Replace	Call	✓
sunrise	0xfc06d2a6	Replace	Call

Beans Minted

None.

Audit

The commit hash of this BIP is TBD.

An audit competition of this upgrade was held via Codehawks using commit hash 662d26f12ee219ee92dc485c06e01a4cb5ee8dfb. The final report can be read here TBD.

Audit remediations were committed and documented in PR #TBD.

Post Audit Changes

The following changes have been made to the BIP code, but have not been audited.

PR #TBD, which does TBD.

Effective

Immediate upon commitment.