code.vegaprotocol.io/vega@v0.79.0/core/integration/features/liquidity-provision/0044-LIME-025.feature

Feature: Check early exit liquidity penalty is working

# For a market with market.liquidity.earlyExitPenalty = 0.25 and total stake = target stake + 140 already,
# if one liquidity provider places a transaction to reduce their stake by 100 followed by a second liquidity
# provider who reduces their commitment by 100, the first liquidity provider will receive a full 100 stake back
# whilst the second will receive a total of 85 back into their general account with 15 transferred into the 
# market's insurance account (40 received without penalty, then the remaining 60 receiving a 25% penalty). (0044-LIME-025)


  Background:
    Given the following network parameters are set:
      | name                                                | value |
      | market.liquidity.bondPenaltyParameter             | 1     |
      | network.markPriceUpdateMaximumFrequency             | 0s    |
      | limits.markets.maxPeggedOrders                      | 2     |
      | validators.epoch.length                             | 5s    |
      | market.liquidity.earlyExitPenalty                 | 0.25  |
    And the liquidity monitoring parameters:
      | name               | triggering ratio | time window | scaling factor |
      | lqm-params         | 0.1              | 24h         | 1              |  
    
    And the average block duration is "1"
    And the simple risk model named "simple-risk-model-1":
      | long | short | max move up | min move down | probability of trading |
      | 0.1  | 0.1   | 60          | 50            | 0.2                    |
    And the fees configuration named "fees-config-1":
      | maker fee | infrastructure fee |
      | 0.004     | 0.001              |
    And the price monitoring named "price-monitoring-1":
      | horizon | probability | auction extension |
      | 1       | 0.99        | 5                 |
    And the liquidity sla params named "SLA":
      | price range | commitment min time fraction | performance hysteresis epochs | sla competition factor |
      | 0.01        | 0.5                          | 1                             | 1.0                    |
    And the markets:
      | id        | quote name | asset | liquidity monitoring | risk model          | margin calculator         | auction duration | fees          | price monitoring   | data source config     | linear slippage factor | quadratic slippage factor | sla params |
      | ETH/DEC21 | ETH        | ETH   | lqm-params           | simple-risk-model-1 | default-margin-calculator | 1                | fees-config-1 | price-monitoring-1 | default-eth-for-future | 0.5                    | 0                         | SLA        |
    And the following network parameters are set:
      | name                                               | value |
      | market.liquidity.providersFeeCalculationTimeStep | 5s    |
    And the parties deposit on asset's general account the following amount:
      | party  | asset | amount     |
      | party1 | ETH   | 100000000  |
      | party2 | ETH   | 100000000  |
      | party3 | ETH   | 100000000  |
      | party4 | ETH   | 100000000  |
    And the parties submit the following liquidity provision:
      | id  | party  | market id | commitment amount | fee   | lp type     |
      | lp1 | party1 | ETH/DEC21 | 600              | 0.001 | submission  |
      | lp2 | party2 | ETH/DEC21 | 540              | 0.001 | submission  |
    And the parties place the following orders:
      | party  | market id | side | volume | price | resulting trades | type       | tif     |
      | party3 | ETH/DEC21 | buy  | 1000   | 900   | 0                | TYPE_LIMIT | TIF_GTC |
      | party3 | ETH/DEC21 | buy  | 10     | 1000  | 0                | TYPE_LIMIT | TIF_GTC |
      | party4 | ETH/DEC21 | sell | 1000   | 1100  | 0                | TYPE_LIMIT | TIF_GTC |
      | party4 | ETH/DEC21 | sell | 10     | 1000  | 0                | TYPE_LIMIT | TIF_GTC |

  Scenario: 001, LP gets penalty for exit (0044-LIME-025)
    When the opening auction period ends for market "ETH/DEC21"
    And the auction ends with a traded volume of "10" at a price of "1000"
    Then the market data for the market "ETH/DEC21" should be:
      | mark price | trading mode            | target stake | supplied stake | open interest | best static bid price | static mid price | best static offer price |
      | 1000       | TRADING_MODE_CONTINUOUS | 1000         | 1140           | 10            | 900                   | 1000             | 1100                    |
    

    # Check we have a valid market with 2 LPs with the right amount of commitment
    When the network moves ahead "5" blocks
    Then the liquidity provisions should have the following states:
      | id  | party  | market    | commitment amount | status           |
      | lp1 | party1 | ETH/DEC21 | 600               | STATUS_ACTIVE |
      | lp2 | party2 | ETH/DEC21 | 540               | STATUS_ACTIVE |
    And the insurance pool balance should be "0" for the market "ETH/DEC21"

    # Reduce the commitment of the first LP and make sure no-one gets penalised.
    And the parties submit the following liquidity provision:
      | id  | party  | market id | commitment amount | fee   | lp type     |
      | lp1 | party1 | ETH/DEC21 | 500               | 0.001 | amendment  |
    When the network moves ahead "5" blocks
    Then the liquidity provisions should have the following states:
      | id  | party  | market    | commitment amount | status           |
      | lp1 | party1 | ETH/DEC21 | 500               | STATUS_ACTIVE |
      | lp2 | party2 | ETH/DEC21 | 540               | STATUS_ACTIVE |
    And the insurance pool balance should be "0" for the market "ETH/DEC21"

    # Reduce the commitment of the second LP and check the insurance pool receives the right amount of penalty
    And the parties submit the following liquidity provision:
      | id  | party  | market id | commitment amount | fee   | lp type     |
      | lp2 | party2 | ETH/DEC21 | 440               | 0.001 | amendment  |
    When the network moves ahead "5" blocks
    Then the liquidity provisions should have the following states:
      | id  | party  | market    | commitment amount | status           |
      | lp1 | party1 | ETH/DEC21 | 500               | STATUS_ACTIVE |
      | lp2 | party2 | ETH/DEC21 | 440              | STATUS_ACTIVE |
    And the insurance pool balance should be "15" for the market "ETH/DEC21"