Implement bep3 evm native conversion logic (#1848) (#1858)

* Implement bep3 evm native conversion logic

* Update changelog

* Fix indentation

* Add bep3 conversion keeper tests

* make DefaultBEP3ConversionDenoms private

* refactor bep3 conversion

* update bep3 tests to cover all bep3 assets

* minor refactor

(cherry picked from commit 3afb656d1f)

Co-authored-by: Draco <draco@dracoli.com>

CHANGELOG.md

@@ -45,6 +45,7 @@ Ref: https://keepachangelog.com/en/1.0.0/
 - (validator-vesting) [#1832] Add grpc query service to replace removed legacy querier
 - (incentive) [#1836] Update x/incentive cli to use grpc query client
 - (ibc) [#1839] Add ibc packet forward middleware for ibc transfers
+- (evmutil) [#1848] Update evm native conversion logic to handle bep3 assets
 
 ## [v0.25.0]
 
@@ -328,6 +329,7 @@ the [changelog](https://github.com/cosmos/cosmos-sdk/blob/v0.38.4/CHANGELOG.md).
   large-scale simulations remotely using aws-batch
 
 [#1846]: https://github.com/Kava-Labs/kava/pull/1846
+[#1848]: https://github.com/Kava-Labs/kava/pull/1848
 [#1839]: https://github.com/Kava-Labs/kava/pull/1839
 [#1836]: https://github.com/Kava-Labs/kava/pull/1836
 [#1832]: https://github.com/Kava-Labs/kava/pull/1832

x/evmutil/keeper/conversion_evm_native.go

@@ -71,7 +71,15 @@ func (k Keeper) ConvertCoinToERC20(
 		return err
 	}
 
-	if err := k.UnlockERC20Tokens(ctx, pair, coin.Amount.BigInt(), receiverAccount); err != nil {
+	// handle bep3 conversion pair (8 decimals sdk.Coin -> 18 decimals erc20)
+	// when converting bep3 bank coins to erc20, we will need to unlock the 18
+	// decimals erc20 equivalent of the 8 decimals bep3 sdk.Coins
+	amountToUnlock := coin.Amount.BigInt()
+	if isBep3Asset(pair.Denom) {
+		amountToUnlock = convertBep3CoinAmountToERC20Amount(coin.Amount.BigInt())
+	}
+
+	if err := k.UnlockERC20Tokens(ctx, pair, amountToUnlock, receiverAccount); err != nil {
 		return err
 	}
 
@@ -102,13 +110,23 @@ func (k Keeper) ConvertERC20ToCoin(
 		return err
 	}
 
+	amountToLock := amount.BigInt()
+	amountToMint := amount.BigInt()
+
+	if isBep3Asset(pair.Denom) {
+		amountToMint, amountToLock, err = bep3ERC20AmountToCoinMintAndERC20LockAmount(amount.BigInt())
+		if err != nil {
+			return err
+		}
+	}
+
 	// lock erc20 tokens
-	if err := k.LockERC20Tokens(ctx, pair, amount.BigInt(), initiator); err != nil {
+	if err := k.LockERC20Tokens(ctx, pair, amountToLock, initiator); err != nil {
 		return err
 	}
 
 	// mint conversion pair coin
-	coin, err := k.MintConversionPairCoin(ctx, pair, amount.BigInt(), receiver)
+	coin, err := k.MintConversionPairCoin(ctx, pair, amountToMint, receiver)
 	if err != nil {
 		return err
 	}

x/evmutil/keeper/conversion_evm_native_bep3.go

@@ -0,0 +1,55 @@
+package keeper
+
+import (
+	"math/big"
+
+	errorsmod "cosmossdk.io/errors"
+	"github.com/kava-labs/kava/x/evmutil/types"
+)
+
+var (
+	bep3Denoms = map[string]bool{
+		"bnb":  true,
+		"busd": true,
+		"btcb": true,
+		"xrpb": true,
+	}
+
+	bep3ConversionFactor = new(big.Int).Exp(big.NewInt(10), big.NewInt(10), nil)
+)
+
+func isBep3Asset(denom string) bool {
+	return bep3Denoms[denom]
+}
+
+// convertBep3CoinAmountToERC20Amount converts a bep3 coin amount with 8 decimals
+// to the equivalent ERC20 token with 18 decimals.
+func convertBep3CoinAmountToERC20Amount(amount *big.Int) (erc20Amount *big.Int) {
+	return new(big.Int).Mul(amount, bep3ConversionFactor)
+}
+
+// convertBep3ERC20AmountToCoinAmount converts a bep3 ERC20 token with 18 decimals
+// to the equivalent coin amount with 8 decimals, and dropping the remainder.
+func convertBep3ERC20AmountToCoinAmount(amount *big.Int) (coinAmount *big.Int) {
+	return new(big.Int).Div(amount, bep3ConversionFactor)
+}
+
+// bep3ERC20AmountToCoinMintAndERC20LockAmount converts 18 decimals erc20 bep3
+// amount to the equivalent 8 decimals coin amount to mint, and the
+// 18 decimals erc20 bep3 amount to lock for the converted coin amount.
+func bep3ERC20AmountToCoinMintAndERC20LockAmount(amount *big.Int) (
+	amountToMint *big.Int, amountToLock *big.Int, err error,
+) {
+	amountToMint = convertBep3ERC20AmountToCoinAmount(amount)
+
+	// make sure we have at least 1 sdk.Coin to mint
+	if amountToMint.Cmp(big.NewInt(0)) == 0 {
+		err := errorsmod.Wrapf(
+			types.ErrInsufficientConversionAmount,
+			"unable to convert bep3 coin due converting less than 1 native unit",
+		)
+		return nil, nil, err
+	}
+	amountToLock = convertBep3CoinAmountToERC20Amount(amountToMint)
+	return amountToMint, amountToLock, nil
+}

x/evmutil/keeper/conversion_evm_native_bep3_test.go

@@ -0,0 +1,415 @@
+package keeper_test
+
+import (
+	"fmt"
+	"testing"
+
+	sdkmath "cosmossdk.io/math"
+	sdk "github.com/cosmos/cosmos-sdk/types"
+	"github.com/stretchr/testify/suite"
+
+	"github.com/kava-labs/kava/x/evmutil/testutil"
+	"github.com/kava-labs/kava/x/evmutil/types"
+)
+
+type Bep3ConversionTestSuite struct {
+	testutil.Suite
+}
+
+var (
+	bep3Denoms = []string{"bnb", "busd", "btcb", "xrpb"}
+)
+
+func TestBep3ConversionTestSuite(t *testing.T) {
+	suite.Run(t, new(Bep3ConversionTestSuite))
+}
+
+func (suite *Bep3ConversionTestSuite) TestConvertCoinToERC20_Bep3() {
+	for _, denom := range bep3Denoms {
+		suite.testConvertBep3CoinToERC20(denom)
+	}
+}
+
+func (suite *Bep3ConversionTestSuite) TestConvertERC20ToCoin_Bep3() {
+	for _, denom := range bep3Denoms {
+		suite.testConvertBep3ERC20ToCoin(denom)
+	}
+}
+
+func (suite *Bep3ConversionTestSuite) setEnabledConversionPairDenom(denom string) {
+	params := suite.Keeper.GetParams(suite.Ctx)
+	params.EnabledConversionPairs[0].Denom = denom
+	suite.Keeper.SetParams(suite.Ctx, params)
+}
+
+func (suite *Bep3ConversionTestSuite) testConvertBep3CoinToERC20(denom string) {
+	invoker, err := sdk.AccAddressFromBech32("kava123fxg0l602etulhhcdm0vt7l57qya5wjcrwhzz")
+	receiverAddr := testutil.MustNewInternalEVMAddressFromString("0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2")
+	suite.Require().NoError(err)
+
+	type errArgs struct {
+		expectPass bool
+		contains   string
+	}
+
+	tests := []struct {
+		name                  string
+		userBankBalance       sdkmath.Int
+		expUserErc20Balance   sdkmath.Int
+		moduleErc20Balance    sdkmath.Int
+		expModuleErc20Balance sdkmath.Int
+		disablePair           bool
+		conversionDenom       string
+		coinToConvert         sdk.Coin
+		errArgs               errArgs
+	}{
+		{
+			name:                  "success",
+			userBankBalance:       sdkmath.NewInt(1_234),
+			moduleErc20Balance:    sdkmath.NewInt(10e13),
+			expUserErc20Balance:   sdkmath.NewInt(1.234e13),
+			expModuleErc20Balance: sdkmath.NewInt(8.766e13),
+			coinToConvert:         sdk.NewCoin(denom, sdkmath.NewInt(1_234)),
+			errArgs: errArgs{
+				expectPass: true,
+			},
+		},
+		{
+			name:                  "success - convert smallest unit",
+			userBankBalance:       sdkmath.NewInt(2),
+			moduleErc20Balance:    sdkmath.NewInt(10e13),
+			expUserErc20Balance:   sdkmath.NewInt(1e10),
+			expModuleErc20Balance: sdkmath.NewInt(9.999e13),
+			coinToConvert:         sdk.NewCoin(denom, sdkmath.NewInt(1)),
+			errArgs: errArgs{
+				expectPass: true,
+			},
+		},
+		{
+			name:                  "success - no change when 0 amount converted",
+			userBankBalance:       sdkmath.NewInt(1234),
+			moduleErc20Balance:    sdkmath.NewInt(1e14),
+			expUserErc20Balance:   sdkmath.ZeroInt(),
+			expModuleErc20Balance: sdkmath.NewInt(1e14),
+			coinToConvert:         sdk.NewCoin(denom, sdkmath.NewInt(0)),
+			errArgs: errArgs{
+				expectPass: true,
+			},
+		},
+		{
+			name:               "error - bep3 not enabled",
+			userBankBalance:    sdkmath.NewInt(1_234),
+			moduleErc20Balance: sdkmath.NewInt(1e14),
+			disablePair:        true,
+			coinToConvert:      sdk.NewCoin(denom, sdkmath.NewInt(1_234)),
+			errArgs: errArgs{
+				expectPass: false,
+				contains:   fmt.Sprintf("%s: ERC20 token not enabled to convert to sdk.Coin", denom),
+			},
+		},
+		{
+			name:               "error - module account does not have enough balance to unlock",
+			userBankBalance:    sdkmath.NewInt(1_234),
+			moduleErc20Balance: sdkmath.NewInt(1e9),
+			coinToConvert:      sdk.NewCoin(denom, sdkmath.NewInt(1)),
+			errArgs: errArgs{
+				expectPass: false,
+				contains:   "execution reverted: ERC20: transfer amount exceeds balance",
+			},
+		},
+
+		{
+			name:                  "success - not bep3 conversion",
+			conversionDenom:       "hard",
+			userBankBalance:       sdkmath.NewInt(1_234),
+			moduleErc20Balance:    sdkmath.NewInt(2_000),
+			expUserErc20Balance:   sdkmath.NewInt(1_234),
+			expModuleErc20Balance: sdkmath.NewInt(766),
+			coinToConvert:         sdk.NewCoin("hard", sdkmath.NewInt(1_234)),
+			errArgs: errArgs{
+				expectPass: true,
+			},
+		},
+		{
+			name:               "error - user converting more than user balance",
+			userBankBalance:    sdkmath.NewInt(1_234),
+			moduleErc20Balance: sdkmath.NewInt(1e14),
+			coinToConvert:      sdk.NewCoin(denom, sdkmath.NewInt(20_000)),
+			errArgs: errArgs{
+				expectPass: false,
+				contains:   fmt.Sprintf("spendable balance 1234%s is smaller than 20000%s: insufficient funds", denom, denom),
+			},
+		},
+	}
+
+	for _, tc := range tests {
+		suite.Run(fmt.Sprintf("%s: %s", denom, tc.name), func() {
+			suite.SetupTest()
+			contractAddr := suite.DeployERC20()
+
+			// override conversion denom if needed
+			conversionDenom := tc.conversionDenom
+			if conversionDenom == "" {
+				conversionDenom = denom
+			}
+
+			if !tc.disablePair {
+				suite.setEnabledConversionPairDenom(conversionDenom)
+			}
+
+			pair := types.NewConversionPair(
+				contractAddr,
+				conversionDenom,
+			)
+
+			// fund user & module account
+			if tc.userBankBalance.GT(sdkmath.ZeroInt()) {
+				err = suite.App.FundAccount(
+					suite.Ctx,
+					invoker,
+					sdk.NewCoins(sdk.NewCoin(conversionDenom, tc.userBankBalance)),
+				)
+				suite.Require().NoError(err)
+			}
+			if tc.moduleErc20Balance.GT(sdkmath.ZeroInt()) {
+				err := suite.Keeper.MintERC20(
+					suite.Ctx,
+					pair.GetAddress(), // contractAddr
+					types.NewInternalEVMAddress(types.ModuleEVMAddress), //receiver
+					tc.moduleErc20Balance.BigInt(),
+				)
+				suite.Require().NoError(err)
+			}
+
+			// execute bep3 conversion
+			err := suite.Keeper.ConvertCoinToERC20(suite.Ctx, invoker, receiverAddr, tc.coinToConvert)
+
+			if tc.errArgs.expectPass {
+				suite.Require().NoError(err)
+
+				// validate user balance
+				bal := suite.GetERC20BalanceOf(
+					types.ERC20MintableBurnableContract.ABI,
+					pair.GetAddress(),
+					receiverAddr,
+				)
+				suite.Require().Equal(
+					tc.expUserErc20Balance.BigInt().Int64(),
+					bal.Int64(),
+					"user erc20 balance should match expected amount",
+				)
+
+				// validate module balance
+				bal = suite.GetERC20BalanceOf(
+					types.ERC20MintableBurnableContract.ABI,
+					pair.GetAddress(),
+					types.NewInternalEVMAddress(types.ModuleEVMAddress),
+				)
+				suite.Require().Equal(
+					tc.expModuleErc20Balance.BigInt().Int64(),
+					bal.Int64(),
+					"module erc20 balance should match expected amount",
+				)
+
+				// keeper event
+				suite.EventsContains(suite.GetEvents(),
+					sdk.NewEvent(
+						types.EventTypeConvertCoinToERC20,
+						sdk.NewAttribute(types.AttributeKeyInitiator, invoker.String()),
+						sdk.NewAttribute(types.AttributeKeyReceiver, receiverAddr.String()),
+						sdk.NewAttribute(types.AttributeKeyERC20Address, pair.GetAddress().String()),
+						sdk.NewAttribute(types.AttributeKeyAmount, tc.coinToConvert.String()),
+					))
+			} else {
+				suite.Require().Error(err)
+				suite.Require().Contains(err.Error(), tc.errArgs.contains)
+			}
+		})
+	}
+}
+
+func (suite *Bep3ConversionTestSuite) testConvertBep3ERC20ToCoin(denom string) {
+	invoker := testutil.MustNewInternalEVMAddressFromString("0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2")
+	invokerCosmosAddr, err := sdk.AccAddressFromHexUnsafe(invoker.String()[2:])
+	suite.Require().NoError(err)
+
+	type errArgs struct {
+		expectPass bool
+		contains   string
+	}
+
+	tests := []struct {
+		name                string
+		contractAddr        string
+		conversionDenom     string
+		disablePair         bool
+		userErc20Balance    sdkmath.Int
+		expUserBankBalance  sdkmath.Int
+		expUserErc20Balance sdkmath.Int
+		convertAmount       sdkmath.Int
+		errArgs             errArgs
+	}{
+		{
+			name:                "success - conversion with no dust",
+			userErc20Balance:    sdkmath.NewInt(1.12e18),
+			expUserBankBalance:  sdkmath.NewInt(1.0031e8),
+			expUserErc20Balance: sdkmath.NewInt(0.1169e18),
+			convertAmount:       sdkmath.NewInt(1.0031e18),
+			errArgs: errArgs{
+				expectPass: true,
+			},
+		},
+		{
+			name:                "success - convert smallest bank unit",
+			userErc20Balance:    sdkmath.NewInt(2e18),
+			expUserBankBalance:  sdkmath.NewInt(1),
+			expUserErc20Balance: sdkmath.NewInt(1.99999999e18),
+			convertAmount:       sdkmath.NewInt(1.12e10),
+			errArgs: errArgs{
+				expectPass: true,
+			},
+		},
+		{
+			name:                "success - bnb conversion with dust",
+			userErc20Balance:    sdkmath.NewInt(2e18),
+			expUserBankBalance:  sdkmath.NewInt(12),
+			expUserErc20Balance: sdkmath.NewInt(1.99999988e18),
+			convertAmount:       sdkmath.NewInt(12.123e10),
+			errArgs: errArgs{
+				expectPass: true,
+			},
+		},
+		{
+			name:             "fail - converting less than 1 bank unit",
+			userErc20Balance: sdkmath.NewInt(2e18),
+			convertAmount:    sdkmath.NewInt(12e8),
+			errArgs: errArgs{
+				expectPass: false,
+				contains:   "unable to convert bep3 coin due converting less than 1 native unit",
+			},
+		},
+		{
+			name:             "fail - contract not enabled",
+			disablePair:      true,
+			contractAddr:     "0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2",
+			userErc20Balance: sdkmath.NewInt(2e18),
+			convertAmount:    sdkmath.NewInt(2e18),
+			errArgs: errArgs{
+				expectPass: false,
+				contains:   "ERC20 token not enabled to convert",
+			},
+		},
+		{
+			name:             "fail - converting 0 amount of bep3 erc20 token",
+			userErc20Balance: sdkmath.NewInt(2e18),
+			convertAmount:    sdkmath.NewInt(0),
+			errArgs: errArgs{
+				expectPass: false,
+				contains:   "unable to convert bep3 coin due converting less than 1 native unit",
+			},
+		},
+		{
+			name:                "success - not bep3 conversion",
+			conversionDenom:     "xrp",
+			userErc20Balance:    sdkmath.NewInt(2.5e18),
+			expUserBankBalance:  sdkmath.NewInt(2.1e18),
+			expUserErc20Balance: sdkmath.NewInt(0.4e18),
+			convertAmount:       sdkmath.NewInt(2.1e18),
+			errArgs: errArgs{
+				expectPass: true,
+			},
+		},
+		{
+			name:             "fail - user converting more than user balance",
+			userErc20Balance: sdkmath.NewInt(2e18),
+			convertAmount:    sdkmath.NewInt(2.3e18),
+			errArgs: errArgs{
+				expectPass: false,
+				contains:   "transfer amount exceeds balance",
+			},
+		},
+		{
+			name:                "success - user converting more than balance but only by dust amount",
+			userErc20Balance:    sdkmath.NewInt(2e18),
+			expUserBankBalance:  sdkmath.NewInt(2e8),
+			expUserErc20Balance: sdkmath.NewInt(0),
+			convertAmount:       sdkmath.NewInt(2.0000000091e18),
+			errArgs: errArgs{
+				expectPass: true,
+			},
+		},
+	}
+
+	for _, tc := range tests {
+		suite.Run(fmt.Sprintf("%s: %s", denom, tc.name), func() {
+			suite.SetupTest()
+			contractAddr := suite.DeployERC20()
+
+			// override conversion denom if needed
+			conversionDenom := tc.conversionDenom
+			if conversionDenom == "" {
+				conversionDenom = denom
+			}
+
+			if !tc.disablePair {
+				suite.setEnabledConversionPairDenom(conversionDenom)
+			}
+
+			if tc.contractAddr != "" {
+				contractAddr = testutil.MustNewInternalEVMAddressFromString(tc.contractAddr)
+			}
+
+			pair := types.NewConversionPair(
+				contractAddr,
+				conversionDenom,
+			)
+
+			// fund user erc20 balance
+			if tc.userErc20Balance.GT(sdkmath.ZeroInt()) {
+				err := suite.Keeper.MintERC20(
+					suite.Ctx,
+					pair.GetAddress(),
+					invoker,
+					tc.userErc20Balance.BigInt(),
+				)
+				suite.Require().NoError(err)
+			}
+
+			// create user account, otherwise `CallEVMWithData` will fail due to failing to get user account when finding its sequence.
+			err = suite.App.FundAccount(suite.Ctx, invokerCosmosAddr, sdk.NewCoins(sdk.NewCoin(conversionDenom, sdk.ZeroInt())))
+			suite.Require().NoError(err)
+
+			// execute bep3 conversion
+			err := suite.Keeper.ConvertERC20ToCoin(suite.Ctx, invoker, invokerCosmosAddr, pair.GetAddress(), tc.convertAmount)
+
+			if tc.errArgs.expectPass {
+				suite.Require().NoError(err)
+
+				// validate user balance after conversion
+				bal := suite.GetERC20BalanceOf(
+					types.ERC20MintableBurnableContract.ABI,
+					pair.GetAddress(),
+					testutil.MustNewInternalEVMAddressFromString(invoker.String()),
+				)
+				suite.Require().Equal(tc.expUserErc20Balance.BigInt().Int64(), bal.Int64(), "user erc20 balance is invalid")
+
+				// validate user coin balance
+				coinBal := suite.App.GetBankKeeper().GetBalance(suite.Ctx, invokerCosmosAddr, pair.Denom)
+				suite.Require().Equal(tc.expUserBankBalance, coinBal.Amount, "user coin balance is invalid")
+
+				// keeper event
+				suite.EventsContains(suite.GetEvents(),
+					sdk.NewEvent(
+						types.EventTypeConvertERC20ToCoin,
+						sdk.NewAttribute(types.AttributeKeyERC20Address, pair.GetAddress().String()),
+						sdk.NewAttribute(types.AttributeKeyInitiator, invoker.String()),
+						sdk.NewAttribute(types.AttributeKeyReceiver, invokerCosmosAddr.String()),
+						sdk.NewAttribute(types.AttributeKeyAmount, sdk.NewCoin(pair.Denom, tc.expUserBankBalance).String()),
+					))
+			} else {
+				suite.Require().Error(err)
+				suite.Require().Contains(err.Error(), tc.errArgs.contains)
+			}
+		})
+	}
+}

x/evmutil/types/errors.go

@@ -11,4 +11,5 @@ var (
 	ErrUnexpectedContractEvent      = errorsmod.Register(ModuleName, 6, "unexpected contract event")
 	ErrInvalidCosmosDenom           = errorsmod.Register(ModuleName, 7, "invalid cosmos denom")
 	ErrSDKConversionNotEnabled      = errorsmod.Register(ModuleName, 8, "sdk.Coin not enabled to convert to ERC20 token")
+	ErrInsufficientConversionAmount = errorsmod.Register(ModuleName, 9, "insufficient conversion amount")
 )