From b9620055001db28ae45e1ecaa560e539b5f86639 Mon Sep 17 00:00:00 2001
From: DeePrincipal-dev-lang <alaoabdulquadriopeyemi@gmail.com>
Date: Wed, 27 May 2026 21:56:58 +0000
Subject: [PATCH] feat: add property tests for refund penalty invariants

---
 contracts/Cargo.lock         | 2264 ++++++++++++++++++++++++++++++++++
 contracts/README.md          |   17 +
 contracts/escrow/Cargo.toml  |    1 +
 contracts/escrow/src/lib.rs  |   32 +-
 contracts/escrow/src/test.rs |   71 ++
 5 files changed, 2381 insertions(+), 4 deletions(-)
 create mode 100644 contracts/Cargo.lock

diff --git a/contracts/Cargo.lock b/contracts/Cargo.lock
new file mode 100644
index 00000000..30add367
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diff --git a/contracts/README.md b/contracts/README.md
index 356a1964..b6b24398 100644
--- a/contracts/README.md
+++ b/contracts/README.md
@@ -53,6 +53,23 @@ create_commitment ──► fund_escrow ──► release            (matured: p
 points (`penalty_bps`, max `10_000`) and is paid to the configured fee
 recipient on `refund` / adverse `resolve_dispute`.
 
+### Refund math model and invariants
+
+Refunds are computed with integer basis-point math:
+
+- `penalty = floor(amount * penalty_bps / 10_000)`
+- `refund = amount - penalty`
+
+This keeps the split stable and preserves the invariant `refund + penalty == amount`
+for valid principal amounts. The contract enforces `0 <= penalty_bps <= 10_000`
+and uses checked arithmetic so overflowing intermediate multiplication is rejected
+instead of wrapping. Boundary cases are documented in the contract tests:
+
+- `penalty_bps = 0` → full principal refund, zero penalty
+- `penalty_bps = 10_000` → zero refund, full principal penalty
+- tiny amounts (`1`, `2`, `3`, etc.) remain non-negative and partition cleanly
+- seeded deterministic property tests cover randomized mid-range values and overflow guards
+
 ### Errors
 
 Stable numeric error codes (`#[contracterror]`) are surfaced so the backend
diff --git a/contracts/escrow/Cargo.toml b/contracts/escrow/Cargo.toml
index d0ee6d29..f7239cfe 100644
--- a/contracts/escrow/Cargo.toml
+++ b/contracts/escrow/Cargo.toml
@@ -15,3 +15,4 @@ soroban-sdk = { workspace = true }
 
 [dev-dependencies]
 soroban-sdk = { workspace = true, features = ["testutils"] }
+proptest = "1.5"
diff --git a/contracts/escrow/src/lib.rs b/contracts/escrow/src/lib.rs
index 677f1757..7f3fdc29 100644
--- a/contracts/escrow/src/lib.rs
+++ b/contracts/escrow/src/lib.rs
@@ -246,8 +246,10 @@ impl EscrowContract {
             return Err(Error::InvalidState);
         }
 
-        let penalty = (c.amount * c.penalty_bps as i128) / MAX_PENALTY_BPS as i128;
-        let refund_amount = c.amount - penalty;
+        // Basis points represent a fraction out of 10_000. The penalty is the
+        // floor of `amount * penalty_bps / 10_000`, so refund + penalty always
+        // partitions the original principal while staying within checked math.
+        let (penalty, refund_amount) = Self::compute_refund_amount(c.amount, c.penalty_bps)?;
 
         let token = Self::token_client(&env);
         let contract = env.current_contract_address();
@@ -326,8 +328,8 @@ impl EscrowContract {
             c.status = EscrowStatus::Released;
             paid = c.amount;
         } else {
-            let penalty = (c.amount * c.penalty_bps as i128) / MAX_PENALTY_BPS as i128;
-            paid = c.amount - penalty;
+            let (_, refund_amount) = Self::compute_refund_amount(c.amount, c.penalty_bps)?;
+            paid = refund_amount;
             token.transfer(&contract, &c.owner, &paid);
             c.status = EscrowStatus::Refunded;
         }
@@ -383,6 +385,28 @@ impl EscrowContract {
         Ok(())
     }
 
+    /// Compute the refund split using basis points.
+    ///
+    /// `penalty_bps` is a fraction out of 10_000, so `500` means 5%. We use
+    /// integer floor division and checked arithmetic to preserve the invariant
+    /// `refund + penalty == amount` without overflow.
+    fn compute_refund_amount(amount: i128, penalty_bps: u32) -> Result<(i128, i128), Error> {
+        if amount <= 0 {
+            return Err(Error::InvalidAmount);
+        }
+        if penalty_bps > MAX_PENALTY_BPS {
+            return Err(Error::PenaltyTooHigh);
+        }
+
+        let penalty = amount
+            .checked_mul(penalty_bps as i128)
+            .ok_or(Error::InvalidAmount)?
+            / MAX_PENALTY_BPS as i128;
+        let refund_amount = amount.checked_sub(penalty).ok_or(Error::InvalidAmount)?;
+
+        Ok((penalty, refund_amount))
+    }
+
     fn next_id(env: &Env) -> u64 {
         let id: u64 = env
             .storage()
diff --git a/contracts/escrow/src/test.rs b/contracts/escrow/src/test.rs
index 11d7b7f2..c8236eba 100644
--- a/contracts/escrow/src/test.rs
+++ b/contracts/escrow/src/test.rs
@@ -1,6 +1,8 @@
 #![cfg(test)]
 
 use super::*;
+use proptest::prelude::*;
+use proptest::test_runner::TestRunner;
 use soroban_sdk::{
     testutils::{Address as _, Ledger as _},
     token::{StellarAssetClient, TokenClient},
@@ -207,3 +209,72 @@ fn owner_index_tracks_commitments() {
     assert_eq!(ids.get(0).unwrap(), a);
     assert_eq!(ids.get(1).unwrap(), b);
 }
+
+fn assert_refund_invariants(amount: i128, penalty_bps: u32) {
+    let (penalty, refund) = EscrowContract::compute_refund_amount(amount, penalty_bps)
+        .expect("valid refund inputs must compute deterministically");
+
+    assert!(refund >= 0, "refund must never be negative");
+    assert!(penalty >= 0, "penalty must never be negative");
+    assert_eq!(refund + penalty, amount, "refund and penalty must partition principal");
+    assert!(penalty <= amount, "penalty must never exceed principal");
+}
+
+#[test]
+fn deterministic_seeded_refund_inputs_preserve_penalty_invariants() {
+    let mut runner = TestRunner::deterministic();
+    let strategy = (1i128..=1_000_000i128, 0u32..=10_000u32);
+
+    runner
+        .run(&strategy, |(amount, penalty_bps)| {
+            let (penalty, refund) = EscrowContract::compute_refund_amount(amount, penalty_bps)
+                .map_err(|_| TestCaseError::fail("refund math should stay within arithmetic bounds"))?;
+
+            prop_assert_eq!(refund + penalty, amount);
+            prop_assert!(refund >= 0);
+            prop_assert!(penalty >= 0);
+            prop_assert!(penalty <= amount);
+            Ok(())
+        })
+        .unwrap();
+}
+
+#[test]
+fn penalty_bps_zero_returns_full_refund() {
+    let amount = 9_876;
+    let (penalty, refund) = EscrowContract::compute_refund_amount(amount, 0)
+        .expect("zero penalty must be computable");
+
+    assert_eq!(penalty, 0);
+    assert_eq!(refund, amount);
+    assert_eq!(refund + penalty, amount);
+}
+
+#[test]
+fn penalty_bps_max_returns_zero_refund() {
+    let amount = 9_876;
+    let (penalty, refund) = EscrowContract::compute_refund_amount(amount, 10_000)
+        .expect("max penalty must be computable");
+
+    assert_eq!(penalty, amount);
+    assert_eq!(refund, 0);
+    assert_eq!(refund + penalty, amount);
+}
+
+#[test]
+fn overflow_guard_rejects_extreme_amounts() {
+    let overflow_amount = i128::MAX / 10_000 + 1;
+    let err = EscrowContract::compute_refund_amount(overflow_amount, 10_000)
+        .expect_err("overflowing intermediate multiplication must be rejected");
+
+    assert_eq!(err, Error::InvalidAmount);
+}
+
+#[test]
+fn small_amount_edge_cases_keep_refund_penalty_invariants() {
+    for amount in [1, 2, 3, 5, 10] {
+        assert_refund_invariants(amount, 0);
+        assert_refund_invariants(amount, 1);
+        assert_refund_invariants(amount, 10_000);
+    }
+}