Refactor loan repayment calculations in Moolah SDK to use cumulative borrow index in RAY format (27 decimals) instead of WAD format (18 decimals). Update related tests and documentation to reflect changes, ensuring improved accuracy in dynamic loan repayment computations.

Author: tyler-tsai

packages/moolah-lending-sdk/CHANGELOG.md

@@ -1,5 +1,13 @@
 # @lista-dao/moolah-lending-sdk
 
+## 1.0.11
+
+### Patch Changes
+
+- Refactor loan repayment calculations in Moolah SDK to use cumulative borrow index in RAY format (27 decimals) instead of WAD format (18 decimals). Update related tests and documentation to reflect changes, ensuring improved accuracy in dynamic loan repayment computations.
+- Updated dependencies
+  - @lista-dao/moolah-sdk-core@1.0.11
+
 ## 1.0.10
 
 ### Patch Changes

packages/moolah-lending-sdk/package.json

@@ -1,6 +1,6 @@
 {
   "name": "@lista-dao/moolah-lending-sdk",
-  "version": "1.0.10",
+  "version": "1.0.11",
   "type": "module",
   "main": "./dist/index.js",
   "module": "./dist/index.js",

packages/moolah-lending-sdk/src/__tests__/read/broker/getBrokerUserPositions.test.ts

@@ -13,22 +13,21 @@ const BROKER = "0x1111111111111111111111111111111111111111" as Address;
 const RATE_CALCULATOR =
   "0x2222222222222222222222222222222222222222" as Address;
 const USER = "0x3333333333333333333333333333333333333333" as Address;
-const WAD = 10n ** 18n;
 
 describe("getBrokerUserPositions - dynamic debt", () => {
   beforeEach(() => {
     vi.clearAllMocks();
   });
 
-  it("computes dynamic outstanding with legacy decimal-normalized dynamic rate", async () => {
+  it("computes dynamic outstanding with cumulative borrow index rate", async () => {
     const principal = 17061806491632102441n;
     const normalizedDebt = 16878807815476167930n;
-    const rate = 1011624315990879851775155575n;
+    const rate = 1011624315990879851775155575n; // Cumulative borrow index in RAY format (27 decimals)
     const { totalRepay } = calculateDynamicLoanRepayment(
       {
         principal,
         normalizedDebt,
-        rate: rate / WAD,
+        rate, // Rate is passed directly in RAY format
       },
       18,
     );

packages/moolah-lending-sdk/src/read/broker/getBrokerUserPositions.ts

@@ -13,7 +13,6 @@ import {
 
 const ONE_E27 = 10n ** 27n;
 const SECONDS_PER_WEEK = 604800n;
-const RATE_SCALE_18 = 10n ** 18n;
 const FLEXIBLE_RATE_NUMERATOR = 100n;
 const FLEXIBLE_RATE_DENOMINATOR = 95n;
 
@@ -25,14 +24,6 @@ function normalizeAprRate(apr: bigint): bigint {
   return apr > ONE_E27 ? apr - ONE_E27 : apr;
 }
 
-/**
- * Convert broker dynamic rate (27 decimals) to WAD (18 decimals)
- * expected by calculateDynamicLoanRepayment.
- */
-function normalizeDynamicRateToWad(dynamicRate: bigint): bigint {
-  return dynamicRate / RATE_SCALE_18;
-}
-
 function buildTermRateData(terms: readonly RawFixedTerm[]) {
   const termRateByDuration = new Map<string, Decimal>();
   let currentFlexibleRate = Decimal.ZERO;
@@ -69,7 +60,7 @@ function calculateDynamicOutstanding(
     {
       principal: dynamicPosition.principal,
       normalizedDebt: dynamicPosition.normalizedDebt,
-      rate: normalizeDynamicRateToWad(dynamicRate),
+      rate: dynamicRate, // Rate is cumulative borrow index in RAY format (27 decimals)
     },
     loanDecimals,
   );

packages/moolah-sdk-core/CHANGELOG.md

@@ -1,5 +1,11 @@
 # @lista-dao/moolah-sdk-core
 
+## 1.0.11
+
+### Patch Changes
+
+- Refactor loan repayment calculations in Moolah SDK to use cumulative borrow index in RAY format (27 decimals) instead of WAD format (18 decimals). Update related tests and documentation to reflect changes, ensuring improved accuracy in dynamic loan repayment computations.
+
 ## 1.0.10
 
 ### Patch Changes

packages/moolah-sdk-core/package.json

@@ -1,6 +1,6 @@
 {
   "name": "@lista-dao/moolah-sdk-core",
-  "version": "1.0.10",
+  "version": "1.0.11",
   "type": "module",
   "main": "./dist/index.js",
   "module": "./dist/index.js",

packages/moolah-sdk-core/src/__tests__/loan.test.ts

@@ -72,10 +72,14 @@ describe("getCurrentRoundedTimestamp", () => {
 });
 
 describe("calculateDynamicLoanRepayment", () => {
+  // Rate is now a cumulative borrow index in RAY format (27 decimals)
+  // 1e27 = index of 1.0 (no interest), 1.05e27 = 5% interest accumulated
+  const RATE_INDEX_5_PERCENT = RATE_SCALE_27 + (RATE_SCALE_27 * 5n) / 100n; // 1.05e27
+
   it("should calculate repayment for dynamic loan", () => {
     const result = calculateDynamicLoanRepayment({
       principal: 1000n * DECIMAL_SCALE,
-      rate: 158548959n, // ~5% APY per second rate
+      rate: RATE_INDEX_5_PERCENT, // 5% accumulated interest (borrow index = 1.05)
     });
 
     expect(result.principal.numerator).toBe(1000n * DECIMAL_SCALE);
@@ -87,35 +91,35 @@ describe("calculateDynamicLoanRepayment", () => {
     const result = calculateDynamicLoanRepayment({
       principal: 1000n * DECIMAL_SCALE,
       normalizedDebt: 1100n * DECIMAL_SCALE, // With accrued interest
-      rate: 158548959n,
+      rate: RATE_INDEX_5_PERCENT,
     });
 
     expect(result.principal.numerator).toBe(1100n * DECIMAL_SCALE);
   });
 
-  it("should handle zero rate", () => {
+  it("should handle zero rate (index = 1.0)", () => {
     const result = calculateDynamicLoanRepayment({
       principal: 1000n * DECIMAL_SCALE,
-      rate: 0n,
+      rate: RATE_SCALE_27, // Index = 1.0, no interest accumulated
     });
 
-    // With zero rate, total should equal principal (plus minimal 10-min buffer)
+    // With index = 1.0, total should equal principal (no interest, no buffer)
     expect(result.totalRepay.valueOf()).toBeCloseTo(1000, 0);
   });
 
   it("should respect loan decimals", () => {
     const result6 = calculateDynamicLoanRepayment(
       {
         principal: 1000n * 10n ** 6n,
-        rate: 158548959n,
+        rate: RATE_INDEX_5_PERCENT,
       },
       6,
     );
 
     const result18 = calculateDynamicLoanRepayment(
       {
         principal: 1000n * DECIMAL_SCALE,
-        rate: 158548959n,
+        rate: RATE_INDEX_5_PERCENT,
       },
       18,
     );

packages/moolah-sdk-core/src/calculations/loan.ts

@@ -1,5 +1,4 @@
 import { Decimal } from "../utils/decimal.js";
-import { MathLib } from "@morpho-org/blue-sdk";
 
 import type {
   DynamicLoanPosition,
@@ -45,7 +44,7 @@ export function getCurrentRoundedTimestamp(bufferMinutes = 10): bigint {
  * @param position - The dynamic loan position data
  * @param position.principal - Principal amount borrowed
  * @param position.normalizedDebt - Normalized debt amount (optional, defaults to principal)
- * @param position.rate - Current interest rate per second
+ * @param position.rate - Cumulative borrow index in RAY format (27 decimals)
  * @param loanDecimals - The decimals of the loan token (default: 18)
  * @returns Object containing total repay amount and breakdown of principal and interest
  */
@@ -58,32 +57,33 @@ export function calculateDynamicLoanRepayment(
     loanDecimals,
   );
 
-  // position.rate is already a per-second rate in 18 decimals
-  const rawRate = MathLib.wTaylorCompounded(position.rate, ONE_YEAR_SECONDS);
-  const rateDecimal = new Decimal(rawRate, 18);
+  // rate is the cumulative borrow index in RAY format (27 decimals)
+  const rateIndex = new Decimal(position.rate, 27);
 
-  // Total outstanding = normalized debt × (1 + rate)
-  const currentTotalRepay = normalizedDebt.mul(rateDecimal.add(Decimal.ONE));
+  // Current debt = normalized debt × rate index
+  const currentDebt = normalizedDebt.mul(rateIndex);
 
+  // Principal is the normalized debt
   const principal = normalizedDebt;
-  const tenMinutesRawRate = MathLib.wTaylorCompounded(
-    position.rate,
-    TEN_MINUTES_SECONDS,
-  );
-  const tenMinutesRateDecimal = new Decimal(tenMinutesRawRate, 18);
 
-  const tenMinutesInterest = principal.mul(tenMinutesRateDecimal.toString(18));
+  // Interest = current debt - principal
+  const currentInterest = currentDebt.sub(principal);
+
+  // Buffer = 10% of current interest
+  const bufferRate = new Decimal(10n ** 17n, 18); // 0.1 in 18 decimals
+  const buffer = currentInterest.mul(bufferRate);
 
-  // add additional 10 minutes interest to the current total repay
-  const totalRepay = currentTotalRepay.add(tenMinutesInterest);
+  // Total repay = current debt + buffer
+  const totalRepay = currentDebt.add(buffer);
 
-  const interest = totalRepay.sub(normalizedDebt);
+  // Total interest including buffer
+  const interest = totalRepay.sub(principal);
 
   return {
     totalRepay,
-    principal: normalizedDebt,
+    principal,
     interest,
-    rate: rateDecimal,
+    rate: rateIndex,
   };
 }