TL;DR:

Putting out a challenge for teams to code a backstop liquidity smart contract for hINJ→INJ liquidation. Reward: 1500 INJ (~USD 30K notional, INJ price: 20.14)

Before you actually start working on the bounty, please register by sending your proposal to Injective via email ( rfp@injective.foundation ).

Overview

Create a smart contract that facilitates a fixed-rate swap mechanism between two tokens (Token A and Token B), with designated roles for liquidity providers and swap executors. The contract should maintain a pool of Token A that can be swapped for Token B at a predetermined rate, serving as a backstop liquidity solution during high-demand periods or market stress.

Background

Backstop liquidity mechanisms are crucial for maintaining market stability, especially during periods of high volatility or large liquidation events. This contract will serve as a guaranteed liquidity source with a fixed swap rate, ensuring that there's always available liquidity at a known price point for certain tokens.

Core Requirements

Role-Based Access Control

1. Party A (Liquidity Provider):

• Must be able to supply Token A to the contract

• Can withdraw both Token A and Token B from the contract

• Can set and update the swap rate

• Can manage whitelist of Party B addresses

• Should be set during contract instantiation

2. Party B (Swap Executor):

• Must be whitelisted by Party A

• Can execute swaps up to available liquidity

• Can query contract state and swap parameters

• Cannot modify contract parameters

Functionality

1. Liquidity Management:

• Implementation of deposit function for Token A

• Implementation of withdrawal functions for both tokens

• Tracking of total liquidity supplied

• Prevention of unauthorized withdrawals

2. Swap Mechanism:

• Fixed-rate swap execution

• Validation of available liquidity before swap

• Proper accounting of swapped amounts

• Prevention of swaps when insufficient liquidity

3. Rate Management:

• Ability to set and update swap rates

• Rate validation to prevent invalid values

• Rate querying functionality

4. Whitelist Management:

• Functions to add/remove Party B addresses

• Validation of whitelist status before swaps

• Proper access control for whitelist management

Implementation Requirements

1. Contract Structure:

• Use CosmWasm standard contract structure

• Implement proper error handling and custom errors

• Include comprehensive testing suite

• Follow CosmWasm best practices for state management

2. Security Considerations:

• Implement proper access control checks

• Include reentrancy protection

• Add proper validation for all inputs

• Handle decimal precision carefully

• Include emergency pause functionality

3. Testing Requirements:

• Unit tests for all main functions

• Integration tests for common workflows

• Error case testing

• Proper mock implementations for CW20 tokens

Bonus Features

1. Rate Limits:

• Implement maximum swap amount per transaction

• Add daily/weekly swap limits per address

2. Enhanced Analytics:

• Track historical swap volumes

• Implement swap history queries

• Add liquidity utilization metrics

3. Advanced Features:

• Multiple token pair support

• Tiered whitelist system

• Fee mechanism for swaps

• Time-weighted average price calculation

Evaluation Criteria

1. Code Quality:

• Clean, well-documented code

• Proper error handling

• Efficient state management

• Gas optimization

2. Security:

• Proper access controls

• Input validation

• Safe mathematical operations

• Protection against common attack vectors

3. Testing:

• Comprehensive test coverage

• Edge case handling

• Proper mock implementations

• Integration test scenarios

4. Documentation