Research blanket withdrawal delay to prevent liquidity scarcity event

[miawinthertamaki]

Conduct research on the feasibility and effectiveness of implementing a blanket withdrawal delay in Breadfunds to mitigate the risk of a quick-start liquidity scarcity event.

Requirements:

• Define what constitutes a blanket withdrawal delay and how it would function in the Breadfunds context.
• Determine the threshold for a 'serious liquidity scarcity event' and criteria for triggering concern.
• Assess whether introducing a cap to the withdrawal ratio could address the issue, or if additional mechanisms are needed.

Please provide recommendations with supporting evidence and outline potential implementation considerations.

[franrolotti]

Proposal — “Personal Surplus × Ratio” withdrawal rule

Goal: members can continuously withdraw up to a leverage on what they’ve actually put in, but if they’ve “overdrawn” (because of the ratio), they must deposit again before withdrawing more. No initial lockups or waiting periods, just small withdrawable balances at the beggining and a waiting period after withdrawing more than deposited.

Core definitions

• Per–member running totals

  • totalDeposited[m]: sum of that member’s real deposits (excluding fees).
  • totalExtracted[m]: sum of token amounts withdrawn to that member.
  • Personal Surplus: surplus[m] = totalDeposited[m] - totalExtracted[m] (can go negative).

• Withdrawal capacity (personal):
  personalCapacity[m] = max(0, surplus[m]) * ratio

  • Intuition: as long as your surplus is positive, you may withdraw up to surplus × ratio.
  • If surplus ≤ 0 (because you leveraged previous deposits), you cannot withdraw again until you deposit and restore surplus > 0.

This is stricter (and better aligned to the intent) than the current memberWithdrawableBalance logic:

• Today: remaining allowance ≈ totalDeposited × ratio − totalExtracted.

• Proposed (enforced cap): remaining allowance ≈ (totalDeposited − totalExtracted) × ratio (if positive).

  • When ratio > 1, this avoids “coasting” after heavy withdrawals: if you’ve already withdrawn more than you’ve deposited (surplus ≤ 0), all further withdrawals are blocked until you top up.

Optional anti-“never deposit again” cap

To avoid people from executing a very large withdrawal when they accumulated many deposits, we should create a per-epoch cap such as a reasonable amount for living for one month (it can be configurable). This prevents them from making a huge leveraged withdrawal when they deposited many months, which could generate incentives to never deposit again.

How it plugs into Breadfunds’ current flow

• On deposit:

  • Increase totalDeposited[fund][member] by the member’s amount (i.e., _value).
  • Keep current memberWithdrawableBalance += _value * ratio (back-compat); it just won’t be the only cap anymore.

• On withdraw:

  • Compute the requested _withdrawAmount as already done (days × daily).
  • New gate: require surplus > 0 and _withdrawAmount <= personalCapacity.
  • Also keep the existing guard _withdrawAmount <= memberWithdrawableBalance and the “small vs large” handling.