BIP-49: Misc. Improvements

Proposed: July 29, 2024

Status: Passed

Link: Snapshot

• Proposer
• Summary
• Links
• Problem
• Proposed Solution
• Technical Rationale
• Economic Rationale
• Contract Changes
• Beans Minted
• Audit
• Effective

Proposer

Beanstalk Farms, Brendan Sanderson, Ben Weintraub

Proposer Wallet: 0x4a24e54a090b0fa060f7faaf561510775d314e84

Summary

• Migrate the Fertilizer metadata hosted at fert.bean.money on-chain;
• When , change Soil issued at gm to be the minimum of (1) calculated using the instantaneous reserves from Multi Flow and (2) ;
• 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-49 GitHub PR
• GitHub Commit Hash: 10c50916acdd1a2ea8c3699217779cbbe549389e
• Safe Transaction

Problem

Currently, Fertilizer metadata (the SVG image, traits, etc.) is hosted on centralized infrastructure. In addition to being fundamentally misaligned with the ethos of Beanstalk, 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 .

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. In practice this means Farmers "lock in" the higher BDV at the time of Deposit such that Beanstalk is over crediting BDV to Deposits relative to their value being contributed to it. Beanstalk only supports Convert types that do not decrease the BDV of the Deposit making it impossible for the BDV associated with a Deposit to ever be corrected.

Currently, Beanstalk offers a conservative Chop Rate of ~1.33% (22.49% recapitalization * 5.9012% of debt repaid to Fertilizer) to Unripe holders. Chopping is beneficial to Beanstalk as its obligations and the amount needed to fully recapitalize Unripe assets decreases. 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 L2SR.

Locked Beans are calculated under the extremely conservative 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 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 to be the minimum of (1) calculated using the instantaneous reserves from Multi Flow and (2) .

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 Farmer and can decrease a Deposit's BDV.

Specification

• Add an additional parameter account in LibConvert.convert(…);
• Add the ANTI_LAMBDA_LAMBDA Convert case to the Convert ladder in LibConvert;
• Reorder the Convert ladder in LibConvert so that more frequently used Converts appear first;
• To conform with previous convertData types, update them to return 0, and add a check that ensures proper use of 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 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;
• Change the Locked Beans calculation to assume that up to 75% of Unripe assets are Chopped within a single Season; and
• Decrease the recapitalization amount upon Chop per BIR-14.

Specification

• 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;
• Implement getTotalRecapitalizedPercent(…) to get the US dollar denominated 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 Season Facet must be updated due to changes to the deltaB calculation introduced by the Soil issuance change below peg.

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

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

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. However, thanks to Multi Flow it is now possible for Beanstalk to issue less Soil in these instances without being subject to manipulation.

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 and would prefer to spend an extra Season below peg over issuing a lot of excess Soil.

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

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 currently being contributed 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.

Chop Changes

Beanstalk can be more aggressive given its healthy position in terms of L2SR. Chopping is beneficial to 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. Changing the assumption from 100% to 75% of Unripe assets Chopping within a single Season is still conservative but more realistic.

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 InitBipMiscImprovements contract is called:

• 0x2d130cEfa0bf9D1a3e0445c9478503c326F2F8E9

Unripe Facet

The following UnripeFacet is removed from Beanstalk:

• 0xD64BB5c2dBf12fEBeFc6397926A3c0aA6f8b6535

The following UnripeFacet is added to Beanstalk:

• 0xb52af7889b05eF652468E98D249700415a9F587D

UnripeFacet Function Changes

Convert Facet

The following ConvertFacet is removed from Beanstalk:

• 0xEb1b833D3E81cb3d390514cabB9b809E6170626C

The following ConvertFacet is added to Beanstalk:

• 0x2604D728D8c6918b8C427bF42aa2ed07ceB5cf23

ConvertFacet Function Changes

Convert Getters Facet

The following ConvertGettersFacet is removed from Beanstalk:

• 0x8ABa09526dc6EB6Ea44eE3f8745dD8bc9EF744E2

The following ConvertGettersFacet is added to Beanstalk:

• 0x09D466663586292F5f0c1D99e9547A7A81E887f5

ConvertGettersFacet Function Changes

Season Facet

The following SeasonFacet is removed from Beanstalk:

• 0x92458b7ade7798c45E5ff583c353F70F950d66Cf

The following SeasonFacet is added to Beanstalk:

• 0x51F74C024936E296132c6F4E59b9EEd677eb3B1c

SeasonFacet Function Changes

Season Getters Facet

The following SeasonGettersFacet is removed from Beanstalk:

• 0x5A1675f3156c9e73D7eA20eb58470A0002865E85

The following SeasonGettersFacet is added to Beanstalk:

• 0x9fd4daD032324bC569decC3795731aEC309c2923

SeasonGettersFacet Function Changes

Fertilizer Facet

The following FertilizerFacet is removed from Beanstalk:

• 0x729672c68134E2DF0CdD36D3296841A2993534c7

The following FertilizerFacet is added to Beanstalk:

• 0x9586878Ea437CBB6D4b6381Bde7B064f531CfB77

FertilizerFacet Function Changes

Event Changes

None.

Beans Minted

None.

Audit

The commit hash of this BIP is 10c50916acdd1a2ea8c3699217779cbbe549389e.

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

Audit remediations were committed and documented in PR #943. All changes were reviewed by Cyfrin.

Post Audit Changes

The following changes have been made to the BIP-49 code, but have not been audited:

• Updated the constants in LibLockedUnderlying to reflect the change in the Locked Beans calculation;
• Updated the Beans per Fertilizer remaining calculation in Fertilizer/Internalizer.sol used by the Fertilizer SVGs; and
• Updated SeasonGettersFacet.getTotalDeltaB() to calculate the cumulative deltaB across all whitelisted Wells.

Effective

Immediately upon commitment.