From 524e6de89bcc799af24e1fde11968cc3c6c935cb Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Fri, 6 Jan 2023 14:34:27 -0500
Subject: [PATCH 01/16] feat: add an internal getter for proportion idle

---
 src/MorphoInternal.sol  | 16 ++++++++++++++++
 src/libraries/Types.sol |  2 ++
 2 files changed, 18 insertions(+)

diff --git a/src/MorphoInternal.sol b/src/MorphoInternal.sol
index bfe1492ef..f2bdbced1 100644
--- a/src/MorphoInternal.sol
+++ b/src/MorphoInternal.sol
@@ -27,6 +27,8 @@ import {ReserveConfiguration} from "./libraries/aave/ReserveConfiguration.sol";
 
 import {MorphoStorage} from "./MorphoStorage.sol";
 
+import {ERC20} from "@solmate/utils/SafeTransferLib.sol";
+
 abstract contract MorphoInternal is MorphoStorage {
     using PoolLib for IPool;
     using MarketLib for Types.Market;
@@ -297,4 +299,18 @@ abstract contract MorphoInternal is MorphoStorage {
 
         return liquidityData.debt > 0 ? liquidityData.maxDebt.wadDiv(liquidityData.debt) : type(uint256).max;
     }
+
+    /// @dev Returns a ray.
+    function _proportionIdle(address underlying) internal view returns (uint256) {
+        Types.Market storage market = _market[underlying];
+        uint256 idleSupply = market.idleSupply;
+        if (idleSupply == 0) {
+            return 0;
+        } else {
+            uint256 totalSupplied = ERC20(market.aToken).balanceOf(address(this)).rayMul(
+                market.indexes.supply.poolIndex
+            ) + market.deltas.p2pSupplyAmount.rayMul(market.indexes.supply.p2pIndex);
+            return idleSupply.rayDivUp(totalSupplied + idleSupply);
+        }
+    }
 }
diff --git a/src/libraries/Types.sol b/src/libraries/Types.sol
index cc5b8fb3c..b3ed9e6f1 100644
--- a/src/libraries/Types.sol
+++ b/src/libraries/Types.sol
@@ -56,6 +56,8 @@ library Types {
         uint16 p2pIndexCursor; // 16 bits
         // SLOT 8
         address aToken; // 160 bits
+        // SLOT 9
+        uint256 idleSupply; // 256 bits
     }
 
     // Contains storage-only dynamic arrays and mappings.

From 680a968da639a2c5ae78b2c3b98e9ce44f1fa3c0 Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Fri, 6 Jan 2023 15:23:31 -0500
Subject: [PATCH 02/16] feat: update interest rates model for idle supply

---
 src/MorphoInternal.sol             |  3 ++-
 src/libraries/InterestRatesLib.sol | 11 +++++++----
 src/libraries/Types.sol            |  1 +
 3 files changed, 10 insertions(+), 5 deletions(-)

diff --git a/src/MorphoInternal.sol b/src/MorphoInternal.sol
index f2bdbced1..548f5d767 100644
--- a/src/MorphoInternal.sol
+++ b/src/MorphoInternal.sol
@@ -282,7 +282,8 @@ abstract contract MorphoInternal is MorphoStorage {
                 poolBorrowIndex: indexes.borrow.poolIndex,
                 reserveFactor: market.reserveFactor,
                 p2pIndexCursor: market.p2pIndexCursor,
-                deltas: market.deltas
+                deltas: market.deltas,
+                proportionIdle: _proportionIdle(underlying)
             })
         );
     }
diff --git a/src/libraries/InterestRatesLib.sol b/src/libraries/InterestRatesLib.sol
index d30669ad1..344d850d8 100644
--- a/src/libraries/InterestRatesLib.sol
+++ b/src/libraries/InterestRatesLib.sol
@@ -29,14 +29,16 @@ library InterestRatesLib {
             growthFactors.p2pSupplyGrowthFactor,
             params.lastSupplyIndexes,
             params.deltas.p2pSupplyDelta,
-            params.deltas.p2pSupplyAmount
+            params.deltas.p2pSupplyAmount,
+            params.proportionIdle
         );
         newP2PBorrowIndex = computeP2PIndex(
             growthFactors.poolBorrowGrowthFactor,
             growthFactors.p2pBorrowGrowthFactor,
             params.lastBorrowIndexes,
             params.deltas.p2pBorrowDelta,
-            params.deltas.p2pBorrowAmount
+            params.deltas.p2pBorrowAmount,
+            0
         );
     }
 
@@ -88,14 +90,15 @@ library InterestRatesLib {
         uint256 p2pGrowthFactor,
         Types.MarketSideIndexes256 memory lastIndexes,
         uint256 p2pDelta,
-        uint256 p2pAmount
+        uint256 p2pAmount,
+        uint256 proportionIdle
     ) internal pure returns (uint256) {
         if (p2pAmount == 0 || p2pDelta == 0) {
             return lastIndexes.p2pIndex.rayMul(p2pGrowthFactor);
         }
 
         uint256 shareOfTheDelta = Math.min(
-            p2pDelta.rayMul(lastIndexes.poolIndex).rayDivUp(p2pAmount.rayMul(lastIndexes.p2pIndex)),
+            p2pDelta.rayMul(lastIndexes.poolIndex).rayDivUp(p2pAmount.rayMul(lastIndexes.p2pIndex)) + proportionIdle,
             WadRayMath.RAY // To avoid shareOfTheDelta > 1 with rounding errors.
         ); // In ray.
 
diff --git a/src/libraries/Types.sol b/src/libraries/Types.sol
index b3ed9e6f1..b2debfd10 100644
--- a/src/libraries/Types.sol
+++ b/src/libraries/Types.sol
@@ -105,6 +105,7 @@ library Types {
         uint256 reserveFactor; // The reserve factor percentage (10 000 = 100%).
         uint256 p2pIndexCursor; // The peer-to-peer index cursor (10 000 = 100%).
         Deltas deltas; // The deltas and peer-to-peer amounts.
+        uint256 proportionIdle; // In ray.
     }
 
     struct GrowthFactors {

From 93850b41c5ece6087297206fdd6f18921711624c Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Fri, 6 Jan 2023 16:25:11 -0500
Subject: [PATCH 03/16] feat: handle supply cap

---
 src/PositionsManagerInternal.sol            | 30 ++++++++++++++++++---
 src/libraries/aave/ReserveConfiguration.sol |  5 ++++
 2 files changed, 32 insertions(+), 3 deletions(-)

diff --git a/src/PositionsManagerInternal.sol b/src/PositionsManagerInternal.sol
index 60268f7f2..56c975077 100644
--- a/src/PositionsManagerInternal.sol
+++ b/src/PositionsManagerInternal.sol
@@ -22,6 +22,8 @@ import {EnumerableSet} from "@openzeppelin/contracts/utils/structs/EnumerableSet
 
 import {MatchingEngine} from "./MatchingEngine.sol";
 
+import {ERC20} from "@solmate/utils/SafeTransferLib.sol";
+
 abstract contract PositionsManagerInternal is MatchingEngine {
     using Math for uint256;
     using WadRayMath for uint256;
@@ -110,7 +112,9 @@ abstract contract PositionsManagerInternal is MatchingEngine {
         // Supply on pool.
         if (amount > 0) {
             onPool += amount.rayDiv(indexes.supply.poolIndex); // In scaled balance.
-            toSupply = amount;
+            uint256 toIdle;
+            (toSupply, toIdle) = _handleSupplyCap(underlying, amount);
+            market.idleSupply += toIdle;
         }
 
         _updateSupplierInDS(underlying, user, onPool, inP2P);
@@ -227,7 +231,7 @@ abstract contract PositionsManagerInternal is MatchingEngine {
                     _userBorrows[user].remove(underlying);
                 }
 
-                return (onPool, inP2P, toSupply, toRepay);
+                return (onPool, inP2P, 0, toRepay);
             }
         }
 
@@ -292,7 +296,9 @@ abstract contract PositionsManagerInternal is MatchingEngine {
             deltas.p2pBorrowAmount -= Math.min(amount.rayDiv(indexes.borrow.p2pIndex), deltas.p2pBorrowAmount);
             emit Events.P2PAmountsUpdated(underlying, deltas.p2pSupplyAmount, deltas.p2pBorrowAmount);
 
-            toSupply = amount;
+            uint256 toIdle;
+            (toSupply, toIdle) = _handleSupplyCap(underlying, amount);
+            market.idleSupply += toIdle;
         }
 
         if (inP2P == 0 && onPool == 0) _userBorrows[user].remove(underlying);
@@ -478,4 +484,22 @@ abstract contract PositionsManagerInternal is MatchingEngine {
             ).percentDiv(liquidationBonus);
         }
     }
+
+    function _handleSupplyCap(address underlying, uint256 amount)
+        internal
+        view
+        returns (uint256 toSupply, uint256 toIdle)
+    {
+        uint256 supplyCap = _POOL.getConfiguration(underlying).getSupplyCap();
+        if (supplyCap == 0) return (amount, 0);
+        uint256 totalSupply = ERC20(_market[underlying].aToken).totalSupply();
+        if (totalSupply >= supplyCap) {
+            return (0, amount);
+        } else if (totalSupply + amount > supplyCap) {
+            toSupply = supplyCap - totalSupply;
+            toIdle = amount - toSupply;
+        } else {
+            toSupply = amount;
+        }
+    }
 }
diff --git a/src/libraries/aave/ReserveConfiguration.sol b/src/libraries/aave/ReserveConfiguration.sol
index c10f8ba94..9a0a905b7 100644
--- a/src/libraries/aave/ReserveConfiguration.sol
+++ b/src/libraries/aave/ReserveConfiguration.sol
@@ -33,6 +33,7 @@ library ReserveConfiguration {
     uint256 internal constant RESERVE_DECIMALS_START_BIT_POSITION = 48;
     uint256 internal constant RESERVE_FACTOR_START_BIT_POSITION = 64;
     uint256 internal constant EMODE_CATEGORY_START_BIT_POSITION = 168;
+    uint256 internal constant SUPPLY_CAP_START_BIT_POSITION = 116;
 
     function getActive(DataTypes.ReserveConfigurationMap memory self) internal pure returns (bool) {
         return (self.data & ~ACTIVE_MASK) != 0;
@@ -74,4 +75,8 @@ library ReserveConfiguration {
             (dataLocal & ~EMODE_CATEGORY_MASK) >> EMODE_CATEGORY_START_BIT_POSITION
         );
     }
+
+    function getSupplyCap(DataTypes.ReserveConfigurationMap memory self) internal pure returns (uint256) {
+        return (self.data & ~SUPPLY_CAP_MASK) >> SUPPLY_CAP_START_BIT_POSITION;
+    }
 }

From d37c20023803ca8ab7651737c31e0432141785cf Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Fri, 6 Jan 2023 16:35:29 -0500
Subject: [PATCH 04/16] feat: handle borrow and withdraw with idle supply

---
 src/PositionsManagerInternal.sol | 21 +++++++++++++++++++++
 1 file changed, 21 insertions(+)

diff --git a/src/PositionsManagerInternal.sol b/src/PositionsManagerInternal.sol
index 56c975077..cb7321a7f 100644
--- a/src/PositionsManagerInternal.sol
+++ b/src/PositionsManagerInternal.sol
@@ -154,6 +154,17 @@ abstract contract PositionsManagerInternal is MatchingEngine {
         onPool = marketBalances.scaledPoolBorrowBalance(user);
         inP2P = marketBalances.scaledP2PBorrowBalance(user);
 
+        /// Idle borrow ///
+
+        {
+            uint256 idleSupply = market.idleSupply;
+            if (idleSupply > 0) {
+                uint256 idleToMatch = Math.min(market.idleSupply, amount); // In underlying.
+                market.idleSupply -= idleToMatch;
+                amount -= idleToMatch;
+            }
+        }
+
         /// Peer-to-peer borrow ///
 
         // Match the peer-to-peer supply delta.
@@ -341,6 +352,16 @@ abstract contract PositionsManagerInternal is MatchingEngine {
         onPool = marketBalances.scaledPoolSupplyBalance(user);
         inP2P = marketBalances.scaledP2PSupplyBalance(user);
 
+        /// Idle Withdraw ///
+        {
+            uint256 idleSupply = market.idleSupply;
+            if (idleSupply > 0) {
+                uint256 idleToMatch = Math.min(market.idleSupply, amount); // In underlying.
+                market.idleSupply -= idleToMatch;
+                amount -= idleToMatch;
+            }
+        }
+
         /// Pool withdraw ///
 
         // Withdraw supply on pool.

From 8d7bd55cb907e4cc975edd918019be2ee5acf25f Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Sat, 7 Jan 2023 10:40:18 -0500
Subject: [PATCH 05/16] fix: handling supply cap

---
 src/PositionsManagerInternal.sol | 53 +++++++++++++-------------------
 1 file changed, 21 insertions(+), 32 deletions(-)

diff --git a/src/PositionsManagerInternal.sol b/src/PositionsManagerInternal.sol
index cb7321a7f..3f4427102 100644
--- a/src/PositionsManagerInternal.sol
+++ b/src/PositionsManagerInternal.sol
@@ -112,9 +112,7 @@ abstract contract PositionsManagerInternal is MatchingEngine {
         // Supply on pool.
         if (amount > 0) {
             onPool += amount.rayDiv(indexes.supply.poolIndex); // In scaled balance.
-            uint256 toIdle;
-            (toSupply, toIdle) = _handleSupplyCap(underlying, amount);
-            market.idleSupply += toIdle;
+            toSupply = _handleSupplyCap(underlying, amount);
         }
 
         _updateSupplierInDS(underlying, user, onPool, inP2P);
@@ -156,14 +154,7 @@ abstract contract PositionsManagerInternal is MatchingEngine {
 
         /// Idle borrow ///
 
-        {
-            uint256 idleSupply = market.idleSupply;
-            if (idleSupply > 0) {
-                uint256 idleToMatch = Math.min(market.idleSupply, amount); // In underlying.
-                market.idleSupply -= idleToMatch;
-                amount -= idleToMatch;
-            }
-        }
+        amount = _handleIdleSupply(underlying, amount);
 
         /// Peer-to-peer borrow ///
 
@@ -307,9 +298,7 @@ abstract contract PositionsManagerInternal is MatchingEngine {
             deltas.p2pBorrowAmount -= Math.min(amount.rayDiv(indexes.borrow.p2pIndex), deltas.p2pBorrowAmount);
             emit Events.P2PAmountsUpdated(underlying, deltas.p2pSupplyAmount, deltas.p2pBorrowAmount);
 
-            uint256 toIdle;
-            (toSupply, toIdle) = _handleSupplyCap(underlying, amount);
-            market.idleSupply += toIdle;
+            toSupply = _handleSupplyCap(underlying, amount);
         }
 
         if (inP2P == 0 && onPool == 0) _userBorrows[user].remove(underlying);
@@ -353,14 +342,7 @@ abstract contract PositionsManagerInternal is MatchingEngine {
         inP2P = marketBalances.scaledP2PSupplyBalance(user);
 
         /// Idle Withdraw ///
-        {
-            uint256 idleSupply = market.idleSupply;
-            if (idleSupply > 0) {
-                uint256 idleToMatch = Math.min(market.idleSupply, amount); // In underlying.
-                market.idleSupply -= idleToMatch;
-                amount -= idleToMatch;
-            }
-        }
+        amount = _handleIdleSupply(underlying, amount);
 
         /// Pool withdraw ///
 
@@ -506,21 +488,28 @@ abstract contract PositionsManagerInternal is MatchingEngine {
         }
     }
 
-    function _handleSupplyCap(address underlying, uint256 amount)
-        internal
-        view
-        returns (uint256 toSupply, uint256 toIdle)
-    {
+    function _handleSupplyCap(address underlying, uint256 amount) internal returns (uint256 toSupply) {
         uint256 supplyCap = _POOL.getConfiguration(underlying).getSupplyCap();
-        if (supplyCap == 0) return (amount, 0);
+        if (supplyCap == 0) return (amount);
+
         uint256 totalSupply = ERC20(_market[underlying].aToken).totalSupply();
-        if (totalSupply >= supplyCap) {
-            return (0, amount);
-        } else if (totalSupply + amount > supplyCap) {
+        if (totalSupply + amount > supplyCap) {
+            _market[underlying].idleSupply += totalSupply + amount - supplyCap;
             toSupply = supplyCap - totalSupply;
-            toIdle = amount - toSupply;
         } else {
             toSupply = amount;
         }
     }
+
+    /// @return newAmount the new amount to process accounting for supply of tokens already in this contract.
+    function _handleIdleSupply(address underlying, uint256 amount) internal returns (uint256) {
+        Types.Market storage market = _market[underlying];
+        uint256 idleSupply = market.idleSupply;
+        if (idleSupply > 0) {
+            uint256 idleToMatch = Math.min(idleSupply, amount); // In underlying.
+            market.idleSupply -= idleToMatch;
+            amount -= idleToMatch;
+        }
+        return amount;
+    }
 }

From 1c7e937fe6cbfe02fbf00cbdb2c731d003264f43 Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Sat, 7 Jan 2023 12:03:50 -0500
Subject: [PATCH 06/16] fix: remove supply cap handling from supply

---
 src/PositionsManagerInternal.sol | 3 ++-
 1 file changed, 2 insertions(+), 1 deletion(-)

diff --git a/src/PositionsManagerInternal.sol b/src/PositionsManagerInternal.sol
index 3f4427102..1ce187acb 100644
--- a/src/PositionsManagerInternal.sol
+++ b/src/PositionsManagerInternal.sol
@@ -112,7 +112,7 @@ abstract contract PositionsManagerInternal is MatchingEngine {
         // Supply on pool.
         if (amount > 0) {
             onPool += amount.rayDiv(indexes.supply.poolIndex); // In scaled balance.
-            toSupply = _handleSupplyCap(underlying, amount);
+            toSupply = amount;
         }
 
         _updateSupplierInDS(underlying, user, onPool, inP2P);
@@ -298,6 +298,7 @@ abstract contract PositionsManagerInternal is MatchingEngine {
             deltas.p2pBorrowAmount -= Math.min(amount.rayDiv(indexes.borrow.p2pIndex), deltas.p2pBorrowAmount);
             emit Events.P2PAmountsUpdated(underlying, deltas.p2pSupplyAmount, deltas.p2pBorrowAmount);
 
+            /// note: Only used in breaking repay. Suppliers should not be able to supply if the pool is supply capped
             toSupply = _handleSupplyCap(underlying, amount);
         }
 

From 6850fdcb0f32fe55805e9e6262e395d908a1dfb6 Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Sun, 8 Jan 2023 18:23:25 -0500
Subject: [PATCH 07/16] fix: proportion idle calculation

---
 src/MorphoInternal.sol | 5 ++---
 1 file changed, 2 insertions(+), 3 deletions(-)

diff --git a/src/MorphoInternal.sol b/src/MorphoInternal.sol
index 548f5d767..18d510e54 100644
--- a/src/MorphoInternal.sol
+++ b/src/MorphoInternal.sol
@@ -308,9 +308,8 @@ abstract contract MorphoInternal is MorphoStorage {
         if (idleSupply == 0) {
             return 0;
         } else {
-            uint256 totalSupplied = ERC20(market.aToken).balanceOf(address(this)).rayMul(
-                market.indexes.supply.poolIndex
-            ) + market.deltas.p2pSupplyAmount.rayMul(market.indexes.supply.p2pIndex);
+            uint256 totalSupplied = ERC20(market.aToken).balanceOf(address(this))
+                + market.deltas.p2pSupplyAmount.rayMul(market.indexes.supply.p2pIndex);
             return idleSupply.rayDivUp(totalSupplied + idleSupply);
         }
     }

From 0f314fc9cac4aa00bbf79343cdd7a4d9fddf8df3 Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Sun, 8 Jan 2023 20:27:16 -0500
Subject: [PATCH 08/16] fix: rework to a more correct implementation

---
 src/PositionsManagerInternal.sol   | 34 +++++++++++++++---------------
 src/libraries/InterestRatesLib.sol | 11 +++++-----
 2 files changed, 23 insertions(+), 22 deletions(-)

diff --git a/src/PositionsManagerInternal.sol b/src/PositionsManagerInternal.sol
index 1ce187acb..c78fe02e6 100644
--- a/src/PositionsManagerInternal.sol
+++ b/src/PositionsManagerInternal.sol
@@ -154,8 +154,15 @@ abstract contract PositionsManagerInternal is MatchingEngine {
 
         /// Idle borrow ///
 
-        amount = _handleIdleSupply(underlying, amount);
-
+        {
+            uint256 idleSupply = market.idleSupply;
+            if (idleSupply > 0) {
+                uint256 idleToMatch = Math.min(idleSupply, amount); // In underlying.
+                market.idleSupply -= idleToMatch;
+                amount -= idleToMatch;
+                inP2P += idleToMatch.rayDiv(indexes.borrow.p2pIndex);
+            }
+        }
         /// Peer-to-peer borrow ///
 
         // Match the peer-to-peer supply delta.
@@ -342,9 +349,6 @@ abstract contract PositionsManagerInternal is MatchingEngine {
         onPool = marketBalances.scaledPoolSupplyBalance(user);
         inP2P = marketBalances.scaledP2PSupplyBalance(user);
 
-        /// Idle Withdraw ///
-        amount = _handleIdleSupply(underlying, amount);
-
         /// Pool withdraw ///
 
         // Withdraw supply on pool.
@@ -365,6 +369,14 @@ abstract contract PositionsManagerInternal is MatchingEngine {
         }
 
         inP2P -= Math.min(inP2P, amount.rayDiv(indexes.supply.p2pIndex)); // In peer-to-peer supply unit.
+
+        /// Idle Withdraw ///
+        if (amount > 0 && market.idleSupply > 0 && inP2P > 0) {
+            uint256 matchedIdle = Math.min(Math.min(market.idleSupply, amount), inP2P.rayMul(indexes.supply.p2pIndex));
+            market.idleSupply -= matchedIdle;
+            inP2P -= matchedIdle.rayDiv(indexes.supply.p2pIndex);
+        }
+
         _updateSupplierInDS(underlying, user, onPool, inP2P);
 
         // Reduce the peer-to-peer supply delta.
@@ -501,16 +513,4 @@ abstract contract PositionsManagerInternal is MatchingEngine {
             toSupply = amount;
         }
     }
-
-    /// @return newAmount the new amount to process accounting for supply of tokens already in this contract.
-    function _handleIdleSupply(address underlying, uint256 amount) internal returns (uint256) {
-        Types.Market storage market = _market[underlying];
-        uint256 idleSupply = market.idleSupply;
-        if (idleSupply > 0) {
-            uint256 idleToMatch = Math.min(idleSupply, amount); // In underlying.
-            market.idleSupply -= idleToMatch;
-            amount -= idleToMatch;
-        }
-        return amount;
-    }
 }
diff --git a/src/libraries/InterestRatesLib.sol b/src/libraries/InterestRatesLib.sol
index 344d850d8..9efe0cd5c 100644
--- a/src/libraries/InterestRatesLib.sol
+++ b/src/libraries/InterestRatesLib.sol
@@ -97,12 +97,13 @@ library InterestRatesLib {
             return lastIndexes.p2pIndex.rayMul(p2pGrowthFactor);
         }
 
-        uint256 shareOfTheDelta = Math.min(
-            p2pDelta.rayMul(lastIndexes.poolIndex).rayDivUp(p2pAmount.rayMul(lastIndexes.p2pIndex)) + proportionIdle,
-            WadRayMath.RAY // To avoid shareOfTheDelta > 1 with rounding errors.
+        uint256 proportionDelta = Math.min(
+            p2pDelta.rayMul(lastIndexes.poolIndex).rayDivUp(p2pAmount.rayMul(lastIndexes.p2pIndex)),
+            WadRayMath.RAY - proportionIdle // To avoid shareOfTheDelta + proportionIdle > 1 with rounding errors.
         ); // In ray.
 
-        return
-            lastIndexes.p2pIndex.rayMul(WadRayMath.rayWeightedAvg(p2pGrowthFactor, poolGrowthFactor, shareOfTheDelta));
+        return lastIndexes.p2pIndex.rayMul(
+            WadRayMath.rayWeightedAvg(p2pGrowthFactor, poolGrowthFactor, proportionDelta + proportionIdle)
+        ) + p2pGrowthFactor.rayMul(proportionDelta);
     }
 }

From 3a822c9ba7166b85f0eafb47c3d4f4971d534e8d Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Tue, 10 Jan 2023 11:50:10 -0500
Subject: [PATCH 09/16] fix: supply cap formulas

---
 src/MorphoInternal.sol             | 5 ++---
 src/PositionsManagerInternal.sol   | 2 +-
 src/libraries/InterestRatesLib.sol | 5 +++--
 3 files changed, 6 insertions(+), 6 deletions(-)

diff --git a/src/MorphoInternal.sol b/src/MorphoInternal.sol
index 18d510e54..ca4b343d5 100644
--- a/src/MorphoInternal.sol
+++ b/src/MorphoInternal.sol
@@ -308,9 +308,8 @@ abstract contract MorphoInternal is MorphoStorage {
         if (idleSupply == 0) {
             return 0;
         } else {
-            uint256 totalSupplied = ERC20(market.aToken).balanceOf(address(this))
-                + market.deltas.p2pSupplyAmount.rayMul(market.indexes.supply.p2pIndex);
-            return idleSupply.rayDivUp(totalSupplied + idleSupply);
+            uint256 totalP2PSupplied = market.deltas.p2pSupplyAmount.rayMulDown(market.indexes.supply.p2pIndex);
+            return idleSupply.rayDivUp(totalP2PSupplied + idleSupply);
         }
     }
 }
diff --git a/src/PositionsManagerInternal.sol b/src/PositionsManagerInternal.sol
index c78fe02e6..d020ca4a1 100644
--- a/src/PositionsManagerInternal.sol
+++ b/src/PositionsManagerInternal.sol
@@ -503,7 +503,7 @@ abstract contract PositionsManagerInternal is MatchingEngine {
 
     function _handleSupplyCap(address underlying, uint256 amount) internal returns (uint256 toSupply) {
         uint256 supplyCap = _POOL.getConfiguration(underlying).getSupplyCap();
-        if (supplyCap == 0) return (amount);
+        if (supplyCap == 0) return amount;
 
         uint256 totalSupply = ERC20(_market[underlying].aToken).totalSupply();
         if (totalSupply + amount > supplyCap) {
diff --git a/src/libraries/InterestRatesLib.sol b/src/libraries/InterestRatesLib.sol
index 9efe0cd5c..1eb4bdee6 100644
--- a/src/libraries/InterestRatesLib.sol
+++ b/src/libraries/InterestRatesLib.sol
@@ -103,7 +103,8 @@ library InterestRatesLib {
         ); // In ray.
 
         return lastIndexes.p2pIndex.rayMul(
-            WadRayMath.rayWeightedAvg(p2pGrowthFactor, poolGrowthFactor, proportionDelta + proportionIdle)
-        ) + p2pGrowthFactor.rayMul(proportionDelta);
+            p2pGrowthFactor.rayMul(WadRayMath.RAY - proportionDelta - proportionIdle)
+                + poolGrowthFactor.rayMul(proportionDelta) + proportionIdle
+        );
     }
 }

From c50b6dde0c9c10d457eb92bc80e66957f68a95bf Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Thu, 12 Jan 2023 10:57:05 -0500
Subject: [PATCH 10/16] fix: supply cap formulas

---
 src/MorphoInternal.sol           | 2 +-
 src/PositionsManagerInternal.sol | 2 +-
 2 files changed, 2 insertions(+), 2 deletions(-)

diff --git a/src/MorphoInternal.sol b/src/MorphoInternal.sol
index 7b0c319d5..1061da2e5 100644
--- a/src/MorphoInternal.sol
+++ b/src/MorphoInternal.sol
@@ -340,7 +340,7 @@ abstract contract MorphoInternal is MorphoStorage {
             return 0;
         } else {
             uint256 totalP2PSupplied = market.deltas.p2pSupplyAmount.rayMulDown(market.indexes.supply.p2pIndex);
-            return idleSupply.rayDivUp(totalP2PSupplied + idleSupply);
+            return idleSupply.rayDivUp(totalP2PSupplied);
         }
     }
 }
diff --git a/src/PositionsManagerInternal.sol b/src/PositionsManagerInternal.sol
index 7b26ae386..a460eb298 100644
--- a/src/PositionsManagerInternal.sol
+++ b/src/PositionsManagerInternal.sol
@@ -516,8 +516,8 @@ abstract contract PositionsManagerInternal is MatchingEngine {
 
         uint256 totalSupply = ERC20(_market[underlying].aToken).totalSupply();
         if (totalSupply + amount > supplyCap) {
-            _market[underlying].idleSupply += totalSupply + amount - supplyCap;
             toSupply = supplyCap - totalSupply;
+            _market[underlying].idleSupply += amount - toSupply;
         } else {
             toSupply = amount;
         }

From 87e851862b2d5907a7d9b43d1d27410180b2284a Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Thu, 12 Jan 2023 12:43:34 -0500
Subject: [PATCH 11/16] fix: use decimals in supply cap and fix comment in
 interest rates lib

---
 src/PositionsManagerInternal.sol   | 3 ++-
 src/libraries/InterestRatesLib.sol | 2 +-
 2 files changed, 3 insertions(+), 2 deletions(-)

diff --git a/src/PositionsManagerInternal.sol b/src/PositionsManagerInternal.sol
index a460eb298..53c77d0ea 100644
--- a/src/PositionsManagerInternal.sol
+++ b/src/PositionsManagerInternal.sol
@@ -511,7 +511,8 @@ abstract contract PositionsManagerInternal is MatchingEngine {
     }
 
     function _handleSupplyCap(address underlying, uint256 amount) internal returns (uint256 toSupply) {
-        uint256 supplyCap = _POOL.getConfiguration(underlying).getSupplyCap();
+        DataTypes.ReserveConfigurationMap memory config = _POOL.getConfiguration(underlying);
+        uint256 supplyCap = config.getSupplyCap() * (10 ** config.getDecimals());
         if (supplyCap == 0) return amount;
 
         uint256 totalSupply = ERC20(_market[underlying].aToken).totalSupply();
diff --git a/src/libraries/InterestRatesLib.sol b/src/libraries/InterestRatesLib.sol
index 1eb4bdee6..f257d1596 100644
--- a/src/libraries/InterestRatesLib.sol
+++ b/src/libraries/InterestRatesLib.sol
@@ -99,7 +99,7 @@ library InterestRatesLib {
 
         uint256 proportionDelta = Math.min(
             p2pDelta.rayMul(lastIndexes.poolIndex).rayDivUp(p2pAmount.rayMul(lastIndexes.p2pIndex)),
-            WadRayMath.RAY - proportionIdle // To avoid shareOfTheDelta + proportionIdle > 1 with rounding errors.
+            WadRayMath.RAY - proportionIdle // To avoid proportionDelta + proportionIdle > 1 with rounding errors.
         ); // In ray.
 
         return lastIndexes.p2pIndex.rayMul(

From 0cb5fb7667e54228d7fa35e19a861e29a7dbb1c3 Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Thu, 12 Jan 2023 16:27:27 -0500
Subject: [PATCH 12/16] chore: change erc20 import and refine comment

---
 src/MorphoInternal.sol           | 2 +-
 src/PositionsManagerInternal.sol | 4 ++--
 2 files changed, 3 insertions(+), 3 deletions(-)

diff --git a/src/MorphoInternal.sol b/src/MorphoInternal.sol
index 1061da2e5..8d356ba59 100644
--- a/src/MorphoInternal.sol
+++ b/src/MorphoInternal.sol
@@ -28,7 +28,7 @@ import {ReserveConfiguration} from "./libraries/aave/ReserveConfiguration.sol";
 
 import {MorphoStorage} from "./MorphoStorage.sol";
 
-import {ERC20} from "@solmate/utils/SafeTransferLib.sol";
+import {ERC20} from "@solmate/tokens/ERC20.sol";
 
 abstract contract MorphoInternal is MorphoStorage {
     using PoolLib for IPool;
diff --git a/src/PositionsManagerInternal.sol b/src/PositionsManagerInternal.sol
index 53c77d0ea..cf9280674 100644
--- a/src/PositionsManagerInternal.sol
+++ b/src/PositionsManagerInternal.sol
@@ -22,7 +22,7 @@ import {EnumerableSet} from "@openzeppelin/contracts/utils/structs/EnumerableSet
 
 import {MatchingEngine} from "./MatchingEngine.sol";
 
-import {ERC20} from "@solmate/utils/SafeTransferLib.sol";
+import {ERC20} from "@solmate/tokens/ERC20.sol";
 
 abstract contract PositionsManagerInternal is MatchingEngine {
     using Math for uint256;
@@ -381,7 +381,7 @@ abstract contract PositionsManagerInternal is MatchingEngine {
             deltas.p2pBorrowAmount -= Math.min(amount.rayDiv(indexes.borrow.p2pIndex), deltas.p2pBorrowAmount);
             emit Events.P2PAmountsUpdated(underlying, deltas.p2pSupplyAmount, deltas.p2pBorrowAmount);
 
-            /// note: Only used in breaking repay. Suppliers should not be able to supply if the pool is supply capped
+            /// Note: Only used in breaking repay. Suppliers should not be able to supply if the pool is supply capped.
             toSupply = _handleSupplyCap(underlying, amount);
         }
 

From 2a85a248aaad3c55998054ebab2f025f05506369 Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Fri, 13 Jan 2023 11:10:02 -0500
Subject: [PATCH 13/16] fix: change rounding, change a control struct format,
 add comments

---
 src/MorphoInternal.sol             |  5 ++---
 src/PositionsManagerInternal.sol   | 10 ++++++----
 src/libraries/InterestRatesLib.sol |  2 ++
 3 files changed, 10 insertions(+), 7 deletions(-)

diff --git a/src/MorphoInternal.sol b/src/MorphoInternal.sol
index 8d356ba59..ffd8009be 100644
--- a/src/MorphoInternal.sol
+++ b/src/MorphoInternal.sol
@@ -338,9 +338,8 @@ abstract contract MorphoInternal is MorphoStorage {
         uint256 idleSupply = market.idleSupply;
         if (idleSupply == 0) {
             return 0;
-        } else {
-            uint256 totalP2PSupplied = market.deltas.p2pSupplyAmount.rayMulDown(market.indexes.supply.p2pIndex);
-            return idleSupply.rayDivUp(totalP2PSupplied);
         }
+        uint256 totalP2PSupplied = market.deltas.p2pSupplyAmount.rayMul(market.indexes.supply.p2pIndex);
+        return idleSupply.rayDivUp(totalP2PSupplied);
     }
 }
diff --git a/src/PositionsManagerInternal.sol b/src/PositionsManagerInternal.sol
index cf9280674..03ad0f3fc 100644
--- a/src/PositionsManagerInternal.sol
+++ b/src/PositionsManagerInternal.sol
@@ -238,12 +238,13 @@ abstract contract PositionsManagerInternal is MatchingEngine {
         {
             uint256 idleSupply = market.idleSupply;
             if (idleSupply > 0) {
-                uint256 idleToMatch = Math.min(idleSupply, amount); // In underlying.
-                market.idleSupply -= idleToMatch;
-                amount -= idleToMatch;
-                vars.inP2P += idleToMatch.rayDiv(indexes.borrow.p2pIndex);
+                uint256 matchedIdle = Math.min(idleSupply, amount); // In underlying.
+                market.idleSupply -= matchedIdle;
+                amount -= matchedIdle;
+                vars.inP2P += matchedIdle.rayDiv(indexes.borrow.p2pIndex);
             }
         }
+
         /// Peer-to-peer borrow ///
 
         // Match the peer-to-peer supply delta.
@@ -424,6 +425,7 @@ abstract contract PositionsManagerInternal is MatchingEngine {
         vars.inP2P -= Math.min(vars.inP2P, amount.rayDiv(indexes.supply.p2pIndex)); // In peer-to-peer supply unit.
 
         /// Idle Withdraw ///
+
         if (amount > 0 && market.idleSupply > 0 && vars.inP2P > 0) {
             uint256 matchedIdle =
                 Math.min(Math.min(market.idleSupply, amount), vars.inP2P.rayMul(indexes.supply.p2pIndex));
diff --git a/src/libraries/InterestRatesLib.sol b/src/libraries/InterestRatesLib.sol
index f257d1596..a3327238b 100644
--- a/src/libraries/InterestRatesLib.sol
+++ b/src/libraries/InterestRatesLib.sol
@@ -102,6 +102,8 @@ library InterestRatesLib {
             WadRayMath.RAY - proportionIdle // To avoid proportionDelta + proportionIdle > 1 with rounding errors.
         ); // In ray.
 
+        // Equivalent to:
+        // lastP2PIndex * (p2pGrowthFactor * (1 - proportionDelta - proportionIdle) + poolGrowthFactor * proportionDelta + idleGrowthFactor * proportionIdle)
         return lastIndexes.p2pIndex.rayMul(
             p2pGrowthFactor.rayMul(WadRayMath.RAY - proportionDelta - proportionIdle)
                 + poolGrowthFactor.rayMul(proportionDelta) + proportionIdle

From 570af385e965242220d073b6ae1309ed5dc7b7fd Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Fri, 13 Jan 2023 12:41:50 -0500
Subject: [PATCH 14/16] fix: remove unnecessary subtraction

---
 src/PositionsManagerInternal.sol | 1 -
 1 file changed, 1 deletion(-)

diff --git a/src/PositionsManagerInternal.sol b/src/PositionsManagerInternal.sol
index 03ad0f3fc..3efeeb17c 100644
--- a/src/PositionsManagerInternal.sol
+++ b/src/PositionsManagerInternal.sol
@@ -430,7 +430,6 @@ abstract contract PositionsManagerInternal is MatchingEngine {
             uint256 matchedIdle =
                 Math.min(Math.min(market.idleSupply, amount), vars.inP2P.rayMul(indexes.supply.p2pIndex));
             market.idleSupply -= matchedIdle;
-            vars.inP2P -= matchedIdle.rayDiv(indexes.supply.p2pIndex);
         }
 
         _updateSupplierInDS(underlying, user, vars.onPool, vars.inP2P);

From 090c7d07f6a139f6cdc0e9bc9d45e74422593205 Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Fri, 13 Jan 2023 12:45:00 -0500
Subject: [PATCH 15/16] chore: format interest rate comment

---
 src/libraries/InterestRatesLib.sol | 6 +++++-
 1 file changed, 5 insertions(+), 1 deletion(-)

diff --git a/src/libraries/InterestRatesLib.sol b/src/libraries/InterestRatesLib.sol
index a3327238b..8074a43e9 100644
--- a/src/libraries/InterestRatesLib.sol
+++ b/src/libraries/InterestRatesLib.sol
@@ -103,7 +103,11 @@ library InterestRatesLib {
         ); // In ray.
 
         // Equivalent to:
-        // lastP2PIndex * (p2pGrowthFactor * (1 - proportionDelta - proportionIdle) + poolGrowthFactor * proportionDelta + idleGrowthFactor * proportionIdle)
+        // lastP2PIndex * (
+        // p2pGrowthFactor *
+        // (1 - proportionDelta - proportionIdle)
+        // + poolGrowthFactor * proportionDelta + idleGrowthFactor * proportionIdle
+        // )
         return lastIndexes.p2pIndex.rayMul(
             p2pGrowthFactor.rayMul(WadRayMath.RAY - proportionDelta - proportionIdle)
                 + poolGrowthFactor.rayMul(proportionDelta) + proportionIdle

From df46046565cb417ad5a3a2df5c802bd33b0a7a9a Mon Sep 17 00:00:00 2001
From: Patrick Kim <patrick@morpho.xyz>
Date: Fri, 13 Jan 2023 12:46:36 -0500
Subject: [PATCH 16/16] chore: reformat ineterest rate lib comment further

---
 src/libraries/InterestRatesLib.sol | 7 +++----
 1 file changed, 3 insertions(+), 4 deletions(-)

diff --git a/src/libraries/InterestRatesLib.sol b/src/libraries/InterestRatesLib.sol
index 8074a43e9..b7346a290 100644
--- a/src/libraries/InterestRatesLib.sol
+++ b/src/libraries/InterestRatesLib.sol
@@ -104,10 +104,9 @@ library InterestRatesLib {
 
         // Equivalent to:
         // lastP2PIndex * (
-        // p2pGrowthFactor *
-        // (1 - proportionDelta - proportionIdle)
-        // + poolGrowthFactor * proportionDelta + idleGrowthFactor * proportionIdle
-        // )
+        // p2pGrowthFactor * (1 - proportionDelta - proportionIdle) +
+        // poolGrowthFactor * proportionDelta +
+        // idleGrowthFactor * proportionIdle)
         return lastIndexes.p2pIndex.rayMul(
             p2pGrowthFactor.rayMul(WadRayMath.RAY - proportionDelta - proportionIdle)
                 + poolGrowthFactor.rayMul(proportionDelta) + proportionIdle