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Overview

The CreditLogic library implements core functions for debt management, interest calculations, and liquidation logic in Gearbox Protocol V3. It handles debt accrual, repayment waterfall mechanics, and liquidation payment distributions.

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Key Features

  • Linear interest growth calculations
  • Debt increase and decrease with interest index management
  • Liquidation payment calculations with premium and fee handling
  • Dynamic liquidation threshold ramping
  • Multi-component debt repayment (quota fees → quota interest → base interest → principal)

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Constants

uint256 constant INDEX_PRECISION = 10 ** 9;
Precision used for interest index calculations.

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Debt and Interest Functions

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calcLinearGrowth

function calcLinearGrowth(
    uint256 value,
    uint256 timestampLastUpdate
) internal view returns (uint256)
Computes growth since last update given yearly growth rate. Parameters:
  • value - The yearly growth value
  • timestampLastUpdate - Timestamp of the last update
Returns: Amount of growth since last update

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calcAccruedInterest

function calcAccruedInterest(
    uint256 amount,
    uint256 cumulativeIndexLastUpdate,
    uint256 cumulativeIndexNow
) internal pure returns (uint256)
Computes interest accrued since the last update using cumulative indices. Parameters:
  • amount - Principal amount
  • cumulativeIndexLastUpdate - Previous cumulative index
  • cumulativeIndexNow - Current cumulative index
Returns: Accrued interest amount
If the amount is zero, this function returns zero to avoid unnecessary calculations.

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calcTotalDebt

function calcTotalDebt(
    CollateralDebtData memory collateralDebtData
) internal pure returns (uint256)
Computes total debt including principal, accrued interest, and fees. Parameters:
  • collateralDebtData - Struct containing debt data (must have debt fields filled)
Returns: Total debt = debt + accruedInterest + accruedFees

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Debt Management

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calcIncrease

function calcIncrease(
    uint256 amount,
    uint256 debt,
    uint256 cumulativeIndexNow,
    uint256 cumulativeIndexLastUpdate
) internal pure returns (
    uint256 newDebt,
    uint256 newCumulativeIndex
)
Computes new debt principal and interest index after increasing debt. Parameters:
  • amount - Amount to increase debt by
  • debt - Current debt principal
  • cumulativeIndexNow - Current interest index
  • cumulativeIndexLastUpdate - Credit account’s last interest index
Returns:
  • newDebt - Updated debt principal (debt + amount)
  • newCumulativeIndex - New credit account interest index
The new index is calculated to maintain the same accrued interest amount after the debt increase: debt * (indexNow / indexLastUpdate - 1) = (debt + amount) * (indexNow / indexNew - 1)

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calcDecrease

function calcDecrease(
    uint256 amount,
    uint256 debt,
    uint256 cumulativeIndexNow,
    uint256 cumulativeIndexLastUpdate,
    uint128 cumulativeQuotaInterest,
    uint128 quotaFees,
    uint16 feeInterest
) internal pure returns (
    uint256 newDebt,
    uint256 newCumulativeIndex,
    uint256 profit,
    uint128 newCumulativeQuotaInterest,
    uint128 newQuotaFees
)
Computes new debt values after repayment following the waterfall order. Parameters:
  • amount - Amount to repay
  • debt - Current debt principal
  • cumulativeIndexNow - Current interest index
  • cumulativeIndexLastUpdate - Credit account’s last interest index
  • cumulativeQuotaInterest - Current quota interest
  • quotaFees - Accrued quota fees
  • feeInterest - DAO fee on interest (in basis points)
Returns:
  • newDebt - Remaining debt principal
  • newCumulativeIndex - Updated interest index
  • profit - DAO fees collected
  • newCumulativeQuotaInterest - Remaining quota interest
  • newQuotaFees - Remaining quota fees
Debt components are repaid in strict order:
  1. Quota update fees
  2. Quota interest
  3. Base interest
  4. Debt principal
Each component only decreases after the previous one is fully repaid.

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Liquidation Functions

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calcLiquidationPayments

function calcLiquidationPayments(
    CollateralDebtData memory collateralDebtData,
    uint16 feeLiquidation,
    uint16 liquidationDiscount,
    function (uint256) view returns (uint256) amountWithFeeFn,
    function (uint256) view returns (uint256) amountMinusFeeFn
) internal view returns (
    uint256 amountToPool,
    uint256 remainingFunds,
    uint256 profit,
    uint256 loss
)
Computes distribution of funds during credit account liquidation. Parameters:
  • collateralDebtData - Collateral and debt data (both must be filled)
  • feeLiquidation - Liquidation fee charged by DAO (in basis points)
  • liquidationDiscount - Discount applied to collateral (= 1 - liquidation premium)
  • amountWithFeeFn - Function to calculate amount with fee added
  • amountMinusFeeFn - Function to calculate amount with fee deducted
Returns:
  • amountToPool - Underlying tokens to send to the pool
  • remainingFunds - Underlying tokens to send to account owner
  • profit - DAO fees collected
  • loss - Unpaid debt (bad debt)
Liquidation process:
  1. Apply liquidation premium and fee to total collateral value
  2. Use resulting funds to repay debt to the pool
  3. Return any excess to the account owner
  4. If funds insufficient, reduce protocol profits before reporting bad debt

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getLiquidationThreshold

function getLiquidationThreshold(
    uint16 ltInitial,
    uint16 ltFinal,
    uint40 timestampRampStart,
    uint24 rampDuration
) internal view returns (uint16)
Returns the current liquidation threshold with support for dynamic ramping. Parameters:
  • ltInitial - Initial liquidation threshold
  • ltFinal - Final liquidation threshold
  • timestampRampStart - Timestamp when ramping begins
  • rampDuration - Duration of the ramp in seconds
Returns: Current liquidation threshold (linearly interpolated during ramp)
Gearbox V3 supports liquidation threshold ramping, allowing LT values to change linearly over time from ltInitial to ltFinal. To set a static LT, write the value to ltInitial with a ramp start far in the future.

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Usage Example

import {CreditLogic} from "@gearbox-protocol/core-v3/contracts/libraries/CreditLogic.sol";
import {CollateralDebtData} from "@gearbox-protocol/core-v3/contracts/interfaces/ICreditManagerV3.sol";

contract MyContract {
    using CreditLogic for CollateralDebtData;

    function calculateDebt(
        CollateralDebtData memory data
    ) external pure returns (uint256) {
        return CreditLogic.calcTotalDebt(data);
    }

    function repayDebt(
        uint256 amount,
        uint256 debt,
        uint256 indexNow,
        uint256 indexLast,
        uint128 quotaInterest,
        uint128 quotaFees,
        uint16 feeInterest
    ) external pure returns (uint256 newDebt, uint256 profit) {
        (newDebt,,profit,,) = CreditLogic.calcDecrease(
            amount,
            debt,
            indexNow,
            indexLast,
            quotaInterest,
            quotaFees,
            feeInterest
        );
    }
}

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