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test(contracts): regression tests for liquidate TotalOutstanding accounting (#1084) - #1735

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test(contracts): regression tests for liquidate TotalOutstanding accounting (#1084)#1735
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LabsCrypt:mainfrom
Banx17:fix/1084-liquidate-total-outstanding

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@Banx17 Banx17 commented Aug 31, 2026

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Closes #1084

Summary

This PR closes #1084 by adding the regression tests required by the issue's
"done when" checklist, verifying that liquidate() correctly retires
TotalOutstanding so it never permanently inflates and starves new loans of
liquidity.

Important context: the core code fix is already merged into main
(line 1714 of contracts/loan_manager/src/lib.rs):

Self::adjust_total_outstanding(&env, &token, -loan.amount);

was added inside liquidate() (merged via #1460, commit b225859),
mirroring the +loan.amount recorded at approve_loan time. The only unmet
"done when" items were the regression tests, which this PR adds.

Changed files

  • contracts/loan_manager/src/test.rs — adds two new regression tests:
    • test_get_total_outstanding_returns_to_baseline_after_liquidation
    • test_repeated_liquidations_do_not_shrink_available_liquidity
  • contracts/loan_manager/src/events.rs — 1-line doc-comment fix for a
    pre-existing, unrelated clippy::doc-lazy-continuation warning that was
    failing the contracts CI job on main (would otherwise block this PR's
    check). No behavior change.

"done when" checklist

  1. liquidate() decrements TotalOutstanding exactly once — satisfied by
    the already-merged code: adjust_total_outstanding(&env, &token, -loan.amount)
    is called in liquidate() alongside the other terminal state mutations
    (status → Liquidated, collateral_amount = 0), before the storage commit
    and external transfers, in the same CEI transaction. liquidate() has a
    single execution path to Liquidated, so there is no double-decrement (a
    double decrement would underflow-panic in adjust_total_outstanding) and no
    missed decrement. The new repeated-liquidation test asserts
    get_total_outstanding() equals the baseline after each of two liquidations,
    catching either a missing or a double decrement.
  2. Overflow/underflow-safeadjust_total_outstanding uses
    checked_add(delta) and panics on negative updated (underflow), matching
    repay, check_default, and check_defaults exactly. No unwrap on the
    adjustment and no changes to caller-side arithmetic were needed or added.
  3. Does not touch LendingPool's internal accounting — the change is
    confined to loan_manager's own TotalOutstanding instance storage via
    liquidate(). LendingPool's pool_balance/accounting is untouched. (Note:
    the already-merged fix likewise only touches loan_manager storage.)
  4. Test: liquidation returns TotalOutstanding to pre-loan baseline — new
    test_get_total_outstanding_returns_to_baseline_after_liquidation: approves
    a loan, asserts outstanding rose by the loan amount, liquidates, and asserts
    get_total_outstanding() returns exactly to its pre-loan baseline (0),
    not merely "decreased."
  5. Test: repeated liquidations don't shrink available liquidity — new
    test_repeated_liquidations_do_not_shrink_available_liquidity: approve →
    liquidate for loan A, then approve → liquidate for loan B, asserting
    get_total_outstanding() returns to baseline after each (proving the
    compounding bug is fixed, not just a single isolated liquidation), and a
    subsequent approve_loan still succeeds against non-starved
    available_liquidity (which is pool_balance - total_outstanding in
    approve_loan).
  6. Test: full lifecycle (repay, default, liquidate) returns to baseline
    the existing test_get_total_outstanding_tracks_approve_and_repay (repay → 0)
    and test_get_total_outstanding_decreases_on_check_default (default → 0)
    cover the repay and default legs; the new liquidate test above covers the
    third leg. Together all three terminal paths are verified to restore
    TotalOutstanding to baseline, matching the issue's cross-path invariant.

These tests genuinely catch the original bug: if the liquidate() decrement is
removed, the outstanding-after-liquidation assertions (assert_eq!( get_total_outstanding, baseline)) fail because TotalOutstanding stays
inflated by the full loan amount (1000 / 2000 in the two tests).

Local verification

Environment note: this is a Windows host. The contract test harness links the
soroban contract cdylibs as Windows DLLs, and those cdylibs exceed the Windows
PE export table limit (max 65,535 symbols), so cargo test cannot link/run the
contract unit tests locally — a hard, pre-existing, environment-specific
limitation. CI runs the same suite on Linux (ubuntu-24.04) where it passes.
I validated the change with the equivalent compile/check/lint commands that CI
runs (CI's exact commands per .github/workflows/ci.yml):

cargo fmt --all -- --check          # exit 0
cargo check --tests -p loan_manager # exit 0 — new tests type-check
cargo clippy --tests -p loan_manager -- -D warnings  # exit 0 — zero warnings

cargo clippy before the events.rs fix surfaced the pre-existing
clippy::doc-lazy-continuation warning at events.rs:62; after the 1-line fix
clippy passes with zero warnings. cargo test will be exercised by CI on Linux.

The doc comment for loan_approved' continuing paragraph was flagged by
clippy::doc-lazy-continuation under -D warnings, which has been failing
the contracts CI job on main since it was introduced. Add the separating
blank line so the paragraph is no longer treated as a continuation of the
preceding numbered list.
…accounting (LabsCrypt#1084)

liquidate() retires TotalOutstanding via adjust_total_outstanding(-loan.amount),
mirroring the increment recorded at approval. The "done when" checklist for
LabsCrypt#1084 required regression tests proving the accounting never permanently
inflates TotalOutstanding and starves later loans of liquidity:

- A single approve -> liquidate cycle returns get_total_outstanding() exactly
  to its pre-loan baseline (not merely "decreased").
- Repeated approve -> liquidate cycles across two loans do not compound the
  inflation and leave available_liquidity non-starved, and a subsequent
  approve_loan still succeeds.
- Combined with the existing repay and check_default tests, the full lifecycle
  (repay, default, liquidate) is covered: every terminal path returns
  TotalOutstanding to its pre-loan baseline.

These tests genuinely catch the original bug: if the liquidate() decrement is
removed, the outstanding assertion after liquidation fails because
TotalOutstanding stays inflated by the full loan amount.
@Banx17
Banx17 force-pushed the fix/1084-liquidate-total-outstanding branch from 3621ab1 to e90eb30 Compare August 31, 2026 12:57
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[Contracts] liquidate() never decrements TotalOutstanding, permanently inflating it and starving new loans of liquidity

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