LP-0102: Oracle Dispute Resolution for Perpetuals

Abstract

This proposal introduces UMA-based price dispute resolution for Lux's GMX-style perpetuals. The system allows users to challenge FastPriceFeed prices with bonded assertions, providing economic security against oracle manipulation while maintaining low-latency trading.

Motivation

GMX-style perpetuals rely on keeper-updated FastPriceFeed for low-latency execution. While this provides excellent UX, it creates potential attack vectors:

Keeper Collusion - Malicious keepers reporting incorrect prices
Price Manipulation - Coordinated attacks during low liquidity
Liquidation Hunting - Artificial price spikes to liquidate positions
MEV Extraction - Front-running price updates

UMA's dispute mechanism provides an economic backstop without sacrificing latency for normal operations.

Specification

Architecture

┌─────────────────────────────────────────────────────────────────────────┐
│                    PERPS DISPUTE ARCHITECTURE                            │
├─────────────────────────────────────────────────────────────────────────┤
│                                                                          │
│  Normal Flow (No Dispute):                                               │
│  FastPriceFeed → VaultPriceFeed → Vault → Execution                     │
│                                                                          │
│  Dispute Flow:                                                           │
│  1. User notices incorrect price                                         │
│  2. Calls PerpsDisputeAdapter.disputePrice(token, claimedPrice, bond)   │
│  3. UMA assertion created with ancillary data                            │
│  4. If undisputed → price was correct, disputer loses bond              │
│  5. If disputed → escalates to DVM                                       │
│  6. If DVM rules price was wrong → circuit breaker triggered            │
│                                                                          │
└─────────────────────────────────────────────────────────────────────────┘

PerpsDisputeAdapter Contract

contract PerpsDisputeAdapter is IOptimisticRequester {
    // Core functions
    function disputePrice(
        address token,
        uint256 claimedPrice,
        uint256 bond
    ) external returns (bytes32 disputeId);

    function settleDispute(bytes32 disputeId) external;

    // UMA callbacks
    function priceProposed(...) external;
    function priceDisputed(...) external;
    function priceSettled(...) external;

    // Circuit breaker
    function triggerCircuitBreaker(address token) internal;
    function resetCircuitBreaker(address token) external;
}

Configurable Bonds

Per-token bond configuration:

struct TokenBondConfig {
    uint256 minBond;
    uint256 maxBond;
    bool isConfigured;
}

mapping(address => TokenBondConfig) public tokenBondConfigs;

Circuit Breaker Integration

When a dispute resolves in favor of the disputer (price was incorrect):

Trading Pause - New positions blocked for affected token
Liquidation Pause - Liquidations frozen during investigation
Position Review - Affected positions flagged for manual review
Auto-Reset - Circuit breaker lifts after configured duration

UMA Integration

The dispute creates a UMA price request with ancillary data:

Token: 0x...
Disputed Price: $3,400.00
Claimed Correct Price: $3,500.00
Timestamp: 1704067200
FastPriceFeed Address: 0x...

DVM voters verify the claimed price against external sources (Chainlink, exchange APIs, etc.).

Rationale

Parameter	Value	Notes
Default Bond	1,000 LUSD	Configurable per token
Liveness	2 hours	Time to dispute
Circuit Breaker Threshold	500 bps (5%)	Price deviation to pause
Circuit Breaker Duration	1 hour	Auto-reset after

Backwards Compatibility

This LP is backwards compatible. It introduces an optional dispute mechanism that does not alter the core functionality of the perpetuals protocol for users who do not engage with it.

Test Cases

Successful Dispute: A user successfully disputes a price, triggers the circuit breaker, and receives the bond.
Failed Dispute: A user's dispute is successfully challenged, and the user loses their bond.
Circuit Breaker: Test that the circuit breaker correctly pauses and resumes trading and liquidations.
Gas and Performance: Benchmark the gas costs for dispute and settlement operations.

Security Considerations

Bond Requirements - Deters frivolous disputes
Liveness Period - Gives time for legitimate challenges
DVM Backstop - Human judgment for ambiguous cases
Circuit Breaker - Limits damage from confirmed manipulation

Attack Mitigation

Attack	Mitigation
Spam Disputes	Bond forfeited if dispute fails
Keeper Collusion	Economic incentive to dispute
Flash Loan Manipulation	Time-locked resolution
DVM Vote Buying	DLUX staking + slashing

Implementation

Contracts in ~/work/lux/standard/contracts/perps/oracle/:

PerpsDisputeAdapter.sol - Main dispute contract
interfaces/IPerpsDisputeAdapter.sol - Interface

Integration points:

FastPriceFeed.sol - Add dispute hook
Vault.sol - Circuit breaker integration
VaultPriceFeed.sol - Fallback price source

NOT Suitable For

UMA disputes are NOT intended for:

Real-time price feeds (too slow)
High-frequency liquidations
Normal trading operations

Use cases are limited to:

Post-hoc price verification
Manipulation detection
Economic security backstop

Oracle Dispute Resolution for Perpetuals