Submitted by GreyArt, also found by static
When escalating claims, the documentation states that the protocol agent is required to pay and stake a certain amount for the process. If the covered protocol is proven correct, then the amount specified by the claim will be paid out. They will also receive the stake amount back in full. If the covered protocols escalation is not successful, then the amount specified by the claim is not paid out and the stake amount is not returned.
The protocol agent is reasonably expected to pay the following:
In reality, the protocol agent will end up paying more, as we shall see in the proof of concept.
Let us assume the following:
On invoking escalate(), the following amounts are required:
However, whats important to note is that UMA will burn half of the BOND collected + final fee. This will go against the claim that the protocol agent will be able to reclaim his stake in full.
We finally note that on settlement, the eventual payout is
Hence, in reality, the protocol agent will only receive 9600 * 2 - 4800 + 400 = 14800 should the dispute be successful. We note that the burnt amount of 4800 / 2 + 400 = 5200 has been taken by UMA.
One can further verify this behaviour by looking at a past resolution of another protocol:
https://dashboard.tenderly.co/tx/main/0x0f03f73a2093e385146791e8f2739dbc04b39145476d6940776680243460100f/debugger?trace=0.6.1
The above example has a bond is 0.0075 ETH, with UMAs final fee being 0.2 ETH. We see that UMA takes 0.2 + 0.5 * 0.0075 = 0.02375 ETH.
Thus, we see that the protocol agent will be charged disproportionally to what is expected.
We suggest changing the parameters of requestAndProposePriceFor() to
where BOND becomes the reward and the actual bond for UMA is 1. Ideally, it should be set to 0, but if set as such, UMA interprets it to use the final fee as the bond amount instead.
[request.bond = bond != 0 ? bond : finalFee;](https://github.com/UMAprotocol/protocol/blob/master/packages/core/contracts/oracle/implementation/SkinnyOptimisticOracle.sol#L321)
This way, the actual amount required from the protocol agent is the BOND + 2 * (USDC wei + umaFee) for the process. He will additionally be returned his BOND + umaFee if his dispute is successful.
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