External Positions

An "external position" is a type of fund holding introduced in v4 that:

  • is not a fungible ERC20 token

  • exists outside of the vault as a distinct contract (one per external position instance)

  • reports its value to the fund in terms of its underlying holdings and liabilities

  • cannot have value withdrawn during a shares redemption (investors in funds that use external positions should almost never redeem in-kind, as any value inside of external positions will effectively be forfeited)

  • is a "beacon" proxy contract that uses the library dictated by the fund's current release (e.g., Sulu)

Persistent architecture

An ExternalPositionProxy is deployed by a persistent ExternalPositionFactory , which serves as an enduring registry of external position "types" (e.g., Compound CDP) and all valid ExternalPositionProxy instances (i.e., those created via the factory).

The ExternalPositionProxy is deployed with a VaultProxy as its owner.

Upon each call, ExternalPositionProxy fetches its library via a getExternalPositionType() callback to its VaultProxy.

Protected / trusted calls to state-changing actions in the ExternalPositionProxy should pass through a protected receiveCallFromVault() , guaranteeing the call passed through the owning VaultProxy .

Release architecture

The lifecycle of an external position is managed via ExternalPositionManagerActions on the ExternalPositionManager extension:

  • CreateExternalPosition -- create (deploy) a new external position and activate it on the VaultProxy

  • CallOnExternalPosition -- make allowed arbitrary calls to interact with the external position, and transfer assets to / from the VaultProxy

  • RemoveExternalPosition -- deactivate an external position from the VaultProxy

  • ReactivateExternalPosition -- reactivate an existing external position on the VaultProxy

Each of these actions has its own policy hook, to allow granular control of risk management.

The ExternalPositionManager stores two updatable reference contracts per external position type, which contain all logic specific to that type:

  • lib is the target library of the beacon ExternalPositionProxy, and contains the business logic for its local accounting and interactions with external protocols

  • parser is a contract used by the ExternalPositionManager to validate and parse call data for each specific action on its external position type

For example, VaultA has a Compound CDP external position already deployed. To add collateral to the CDP:

  • an asset manager calls the ExternalPositionManager 's CallOnExternalPosition action via ComptrollerProxy.callOnExtension() with the desired payload to add 100 cDAI as collateral

  • the ExternalPositionManager looks up its stored CompoundDebtPositionParser and forwards it the payload

  • the CompoundDebtPositionParser validates the call, e.g., that cDAI is a valid cToken

  • the CompoundDebtPositionParser formats the outgoing 100 cDAI into assetsToTransfer and amountsToTransfer arrays, which it returns to the ExternalPositionManager

  • the ExternalPositionManager passes the payload along with the data for assets to transfer (100 cDAI) and to receive (none) to the VaultProxy

  • the VaultProxy transfers 100 cDAI to the target ExternalPositionProxy

  • the VaultProxy calls ExternalPositionProxy.receiveCallFromVault() , passing in the payload

  • ExternalPositionProxy calls back to the VaultProxy for the library to use for its type (Compound CDP), which it pulls from the ExternalPositionManager

  • the ExternalPositionProxy uses the returned CompoundDebtPositionLib to parse and execute the AddCollateralAssets action, adding cDAI to its internal accounting of its managed assets and interacting with Compound to use cDAI as collateral as needed.

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