fix: update isolated debt (#179)

Currently repay & liquidationCall use the same codePath for updating isolated debt.

This is problematic, as:
1. is simply wrong, given that on liquidationCall the function is called **after** removing the collateral flag
2. is inefficient. While on repay we don't know the collateral backing the debt - a lookup makes sense. On liquidationCall on the other hand, we already know the collateral of the user.

Probably on repay the codepath could also be optimized, but as this is a 3.2/3.3 patch let's keep the code changes minimal.

Author: sakulstra

snapshots/Pool.Operations.json

@@ -1,12 +1,12 @@
 {
   "borrow: first borrow->borrowingEnabled": "256480",
   "borrow: recurrent borrow": "248834",
-  "liquidationCall: deficit on liquidated asset": "392439",
-  "liquidationCall: deficit on liquidated asset + other asset": "491810",
-  "liquidationCall: full liquidation": "392439",
-  "liquidationCall: full liquidation and receive ATokens": "368797",
-  "liquidationCall: partial liquidation": "383954",
-  "liquidationCall: partial liquidation and receive ATokens": "360308",
+  "liquidationCall: deficit on liquidated asset": "392180",
+  "liquidationCall: deficit on liquidated asset + other asset": "491819",
+  "liquidationCall: full liquidation": "392180",
+  "liquidationCall: full liquidation and receive ATokens": "368538",
+  "liquidationCall: partial liquidation": "382981",
+  "liquidationCall: partial liquidation and receive ATokens": "359335",
   "repay: full repay": "176521",
   "repay: full repay with ATokens": "173922",
   "repay: partial repay": "189949",

src/contracts/protocol/libraries/logic/IsolationModeLogic.sol

@@ -20,7 +20,7 @@ library IsolationModeLogic {
   event IsolationModeTotalDebtUpdated(address indexed asset, uint256 totalDebt);
 
   /**
-   * @notice updated the isolated debt whenever a position collateralized by an isolated asset is repaid or liquidated
+   * @notice updated the isolated debt whenever a position collateralized by an isolated asset is repaid
    * @param reservesData The state of all the reserves
    * @param reservesList The addresses of all the active reserves
    * @param userConfig The user configuration mapping
@@ -38,27 +38,43 @@ library IsolationModeLogic {
       .getIsolationModeState(reservesData, reservesList);
 
     if (isolationModeActive) {
-      uint128 isolationModeTotalDebt = reservesData[isolationModeCollateralAddress]
-        .isolationModeTotalDebt;
+      updateIsolatedDebt(reservesData, reserveCache, repayAmount, isolationModeCollateralAddress);
+    }
+  }
+
+  /**
+   * @notice updated the isolated debt whenever a position collateralized by an isolated asset is liquidated
+   * @param reservesData The state of all the reserves
+   * @param reserveCache The cached data of the reserve
+   * @param repayAmount The amount being repaid
+   * @param isolationModeCollateralAddress The address of the isolated collateral
+   */
+  function updateIsolatedDebt(
+    mapping(address => DataTypes.ReserveData) storage reservesData,
+    DataTypes.ReserveCache memory reserveCache,
+    uint256 repayAmount,
+    address isolationModeCollateralAddress
+  ) internal {
+    uint128 isolationModeTotalDebt = reservesData[isolationModeCollateralAddress]
+      .isolationModeTotalDebt;
 
-      uint128 isolatedDebtRepaid = (repayAmount /
-        10 **
-          (reserveCache.reserveConfiguration.getDecimals() -
-            ReserveConfiguration.DEBT_CEILING_DECIMALS)).toUint128();
+    uint128 isolatedDebtRepaid = (repayAmount /
+      10 **
+        (reserveCache.reserveConfiguration.getDecimals() -
+          ReserveConfiguration.DEBT_CEILING_DECIMALS)).toUint128();
 
-      // since the debt ceiling does not take into account the interest accrued, it might happen that amount
-      // repaid > debt in isolation mode
-      if (isolationModeTotalDebt <= isolatedDebtRepaid) {
-        reservesData[isolationModeCollateralAddress].isolationModeTotalDebt = 0;
-        emit IsolationModeTotalDebtUpdated(isolationModeCollateralAddress, 0);
-      } else {
-        uint256 nextIsolationModeTotalDebt = reservesData[isolationModeCollateralAddress]
-          .isolationModeTotalDebt = isolationModeTotalDebt - isolatedDebtRepaid;
-        emit IsolationModeTotalDebtUpdated(
-          isolationModeCollateralAddress,
-          nextIsolationModeTotalDebt
-        );
-      }
+    // since the debt ceiling does not take into account the interest accrued, it might happen that amount
+    // repaid > debt in isolation mode
+    if (isolationModeTotalDebt <= isolatedDebtRepaid) {
+      reservesData[isolationModeCollateralAddress].isolationModeTotalDebt = 0;
+      emit IsolationModeTotalDebtUpdated(isolationModeCollateralAddress, 0);
+    } else {
+      uint256 nextIsolationModeTotalDebt = reservesData[isolationModeCollateralAddress]
+        .isolationModeTotalDebt = isolationModeTotalDebt - isolatedDebtRepaid;
+      emit IsolationModeTotalDebtUpdated(
+        isolationModeCollateralAddress,
+        nextIsolationModeTotalDebt
+      );
     }
   }
 }

src/contracts/protocol/libraries/logic/LiquidationLogic.sol

@@ -367,16 +367,17 @@ library LiquidationLogic {
       hasNoCollateralLeft
     );
 
-    // IsolationModeTotalDebt only discounts `actualDebtToLiquidate`, not the fully burned amount in case of deficit creation.
-    // This is by design as otherwise debt debt ceiling would render ineffective if a collateral asset faces bad debt events.
-    // The governance can decide the raise the ceiling to discount manifested deficit.
-    IsolationModeLogic.updateIsolatedDebtIfIsolated(
-      reservesData,
-      reservesList,
-      userConfig,
-      vars.debtReserveCache,
-      vars.actualDebtToLiquidate
-    );
+    if (collateralReserve.configuration.getDebtCeiling() != 0) {
+      // IsolationModeTotalDebt only discounts `actualDebtToLiquidate`, not the fully burned amount in case of deficit creation.
+      // This is by design as otherwise debt debt ceiling would render ineffective if a collateral asset faces bad debt events.
+      // The governance can decide the raise the ceiling to discount manifested deficit.
+      IsolationModeLogic.updateIsolatedDebt(
+        reservesData,
+        vars.debtReserveCache,
+        vars.actualDebtToLiquidate,
+        params.collateralAsset
+      );
+    }
 
     if (params.receiveAToken) {
       _liquidateATokens(reservesData, reservesList, usersConfig, collateralReserve, params, vars);

tests/protocol/pool/Pool.Liquidations.t.sol

@@ -598,6 +598,9 @@ contract PoolLiquidationTests is TestnetProcedures {
       liquidatorBalanceBefore = IERC20(params.collateralAsset).balanceOf(bob);
     }
 
+    vm.expectEmit();
+    emit IsolationModeTotalDebtUpdated(params.collateralAsset, 0);
+
     vm.expectEmit(address(contracts.poolProxy));
     emit LiquidationLogic.LiquidationCall(
       params.collateralAsset,
@@ -608,7 +611,6 @@ contract PoolLiquidationTests is TestnetProcedures {
       bob,
       params.receiveAToken
     );
-
     // Liquidate
     vm.prank(bob);
     contracts.poolProxy.liquidationCall(
@@ -677,6 +679,12 @@ contract PoolLiquidationTests is TestnetProcedures {
     );
     params.receiveAToken = true;
 
+    vm.expectEmit(true, true, false, false);
+    emit IsolationModeTotalDebtUpdated(
+      params.collateralAsset,
+      ((borrowAmount - params.actualDebtToLiquidate) / 1e4)
+    );
+
     // Liquidate
     vm.prank(alice);
     contracts.poolProxy.liquidationCall(