What is Surge-fi?Surge-fi is a fully autonomous and decentralized lending protocol built on Arbitrum.Key Features of Surge-fi:<ul><li>Permissionless: Anyone can use Surge-fi to create a new pool, borrow, or lend without any restrictions.</li><li>Oracleless: Surge-fi operates independently of price oracles for borrowing or liquidations, allowing for a broader range of tokens to be utilized.</li><li>Adminless: The Surge-fi protocol layer requires no centralized control or maintenance from a team.</li><li>Non-upgradable: Once deployed, Surge-fi's protocol contracts cannot be changed or upgraded.</li></ul>Testing Surge-fiIn this article, we will be testing the Surge-fi protocol.What sets Surge-fi apart?Unlike traditional lending protocols that rely on price feeds, Surge-fi assesses collateral sufficiency and liquidations based on changes in liquidity. This approach introduces various scenarios that necessitate testing and simulating the functionality of Surge-fi.Please note: To conduct a thorough review of Surge-fi, it is essential to test various types of transactions on the platform. Evaluating the protocol's performance by manipulating time is crucial. This comprehensive end-to-end testing covers not only lending activities but also extensive manipulation of the system.However, testing Surge-fi on the Arbitrum Mainnet poses several challenges due to the risks associated with using real money and Furthermore, using Arbitrum Testnet comes with the complexity of deploying Surge-fi Protocol.And, using a local hardhat fork or anvil fork of Arbitrum Mainnet also presents its own inconveniences:<ol style="list-style-type:decimal;"><li>Impersonating accounts to obtain ERC20 tokens for testing.</li><li>Lack of an explorer to debug failed transactions.</li><li>Need to write custom scripts for borrowing, lending, and creating pool tokens.</li></ol>As a result, none of these options are feasible for our testing purposes.Leveraging <a href="http://BuildBear.io">BuildBear.io</a> for TestingTo address these challenges, we decided to use <a href="http://buildbear.io/">BuildBear.io</a> to establish a Private Testnet of the Arbitrum Mainnet. This allowed us to effectively utilize Surge-fi's front end and conduct thorough testing.It's worth noting that, as premium users of BuildBear, the chainId we obtain from the platform matches the chainId we are forking. For instance, the private Testnet we created on BuildBear, named "<code>FORWARD-DARTH-VADER</code>," shares the chainId <code>42161</code>, as it is a fork of the Arbitrum Mainnet. This was made possible due to the <code>premium</code> account of BuildBear.Set-up before the testing:&nbsp;Using our Private Testnet Faucet to mint ARB, USDC, USDT, and WBTC Tokens.<figure class="image image_resized" style="width:65.64%;"><img src="https://strapi.buildbear.io/uploads/Untitled_design_13_ef6d43bb81.gif" alt="Untitled_design_(13).gif"></figure>Surge-fi Dashboard<figure class="image image_resized" style="width:72.09%;"><img src="https://strapi.buildbear.io/uploads/Untitled_90_54da22909c.png" alt="Untitled (90).png" srcset="https://strapi.buildbear.io/uploads/thumbnail_Untitled_90_54da22909c.png 167w,https://strapi.buildbear.io/uploads/small_Untitled_90_54da22909c.png 500w,https://strapi.buildbear.io/uploads/medium_Untitled_90_54da22909c.png 750w,https://strapi.buildbear.io/uploads/large_Untitled_90_54da22909c.png 1000w," sizes="100vw"></figure><ol style="list-style-type:decimal;"><li>Creating a New Pool on Surge-fi with WBTC as Collateral Token and USDT as Lent Token</li></ol>The process of creating a pool on Surge-fi using the "Create pool" option is straightforward. However, determining the optimal pool parameters depends on various factors, including market prices, liquidity, and the risk tolerance of pool participants.<figure class="image image_resized" style="width:50%;"><img src="https://strapi.buildbear.io/uploads/Untitled_91_cc483f99f3.png" alt="Untitled (91).png" srcset="https://strapi.buildbear.io/uploads/thumbnail_Untitled_91_cc483f99f3.png 85w,https://strapi.buildbear.io/uploads/small_Untitled_91_cc483f99f3.png 271w,https://strapi.buildbear.io/uploads/medium_Untitled_91_cc483f99f3.png 407w," sizes="100vw"></figure>Please note the following:<ul><li>Loan token address: This refers to the address of the lent token, which should be a non-rebasing ERC20-compliant token.</li><li>Collateral token address: This refers to the address of the token that borrowers will deposit and use as collateral. It should also be a non-rebasing ERC20-compliant token.</li><li>Max collateral ratio: This represents the maximum borrowable amount of loan tokens that borrowers can borrow per unit of collateral tokens.</li><li>Surge utilization rate: This is the utilization rate at which the collateral ratio starts to decline towards zero unless the pool's utilization drops below it.</li><li>Collateral ratio fall duration: This duration determines how quickly the collateral ratio falls from its maximum value to zero. The setting should consider token volatility and other relevant factors. It can be defined in minutes, hours, or days.</li><li>Collateral ratio recovery duration: This duration determines how quickly the collateral ratio recovers from zero to its maximum value. Similar to the fall duration, it should be set based on token volatility and other relevant factors. It can be defined in minutes, hours, or days.</li><li>Minimum borrow rate: This is the borrow rate when the utilization rate is zero percent. It can be set to zero.</li><li>Surge borrow rate: This is the borrow rate when the utilization rate reaches the surge utilization rate. It must be greater than or equal to the minimum rate and less than or equal to the maximum rate.</li><li>Maximum borrow rate: This is the borrow rate when the utilization rate is at 100 percent. It should be greater than or equal to the surge rate.</li></ul>The parameters for the pool have been filled, and the pool is created as shown below.<figure class="image image_resized" style="width:75%;"><img src="https://strapi.buildbear.io/uploads/Untitled_png_1921_1004_1_108b5e7ad5.png" alt="Untitled-png-1921×1004- (1).png" srcset="https://strapi.buildbear.io/uploads/thumbnail_Untitled_png_1921_1004_1_108b5e7ad5.png 233w,https://strapi.buildbear.io/uploads/small_Untitled_png_1921_1004_1_108b5e7ad5.png 500w,https://strapi.buildbear.io/uploads/medium_Untitled_png_1921_1004_1_108b5e7ad5.png 750w," sizes="100vw"></figure>Please Note:<ul><li>Liquidity: Refers to the total number of loan tokens available for borrowing from the pool.</li><li>Total Borrows: Represents the total amount of tokens that have been borrowed from the pool.</li><li>Collateral Ratio: This is the amount of collateral tokens required to borrow a loan token. A higher collateral ratio means that more collateral tokens are needed to borrow a loan token.</li><li>Utilization: Indicates the percentage of the pool's liquidity that has been borrowed. It shows how much of the available liquidity is currently being utilized by borrowers.</li></ul>2. Providing Liquidity Initially, the liquidity in the pool is zero since no tokens have been deposited for lending. To kickstart the lending process, 200 USDT was provided to the pool as the initial liquidity. At this point, no one has borrowed from the pool, resulting in utilization and Supply APY of 0%.<figure class="image image_resized" style="width:75%;"><img src="https://strapi.buildbear.io/uploads/Untitled_92_af1dd0636c.png" alt="Untitled (92).png" srcset="https://strapi.buildbear.io/uploads/thumbnail_Untitled_92_af1dd0636c.png 245w,https://strapi.buildbear.io/uploads/small_Untitled_92_af1dd0636c.png 500w,https://strapi.buildbear.io/uploads/medium_Untitled_92_af1dd0636c.png 750w,https://strapi.buildbear.io/uploads/large_Untitled_92_af1dd0636c.png 1000w," sizes="100vw"></figure>3. Borrowing Tokens<figure class="image image_resized" style="width:73.97%;"><img src="https://strapi.buildbear.io/uploads/Untitled_93_64ff9a46f5.png" alt="Untitled (93).png" srcset="https://strapi.buildbear.io/uploads/thumbnail_Untitled_93_64ff9a46f5.png 245w,https://strapi.buildbear.io/uploads/small_Untitled_93_64ff9a46f5.png 500w,https://strapi.buildbear.io/uploads/medium_Untitled_93_64ff9a46f5.png 750w,https://strapi.buildbear.io/uploads/large_Untitled_93_64ff9a46f5.png 1000w," sizes="100vw"></figure>Provided 1 WBTC as collateral, and borrow 150 USDT from the pool.<ul><li>Supply APR: increases from 0% to 7.51%.</li><li>Utilization: The utilization rate of the pool changes from 0% to 75%.</li><li>Borrow APR: The Borrow APR changes from 5% to 9.75%.</li></ul>Explanation: By borrowing 150 USDT against 1 WBTC collateral, the borrower has utilized 75% of the pool's liquidity, below the "surge threshold" of 80%.The increase in Supply APR indicates a higher return for liquidity providers due to the increased utilization of the pool, while the higher Borrow APR reflects the higher interest rate for borrowers as the pool's liquidity becomes more utilized.<figure class="image image_resized" style="width:72.33%;"><img src="https://strapi.buildbear.io/uploads/Untitled_95_1ee30eaae4.png" alt="Untitled (95).png" srcset="https://strapi.buildbear.io/uploads/thumbnail_Untitled_95_1ee30eaae4.png 245w,https://strapi.buildbear.io/uploads/small_Untitled_95_1ee30eaae4.png 500w,https://strapi.buildbear.io/uploads/medium_Untitled_95_1ee30eaae4.png 750w,https://strapi.buildbear.io/uploads/large_Untitled_95_1ee30eaae4.png 1000w," sizes="100vw"></figure>4. Using A91 ARB/WETH pool for lending Tokens<figure class="image image_resized" style="width:75%;"><img src="https://strapi.buildbear.io/uploads/Untitled_96_795e9e80e8.png" alt="Untitled (96).png" srcset="https://strapi.buildbear.io/uploads/thumbnail_Untitled_96_795e9e80e8.png 245w,https://strapi.buildbear.io/uploads/small_Untitled_96_795e9e80e8.png 500w,https://strapi.buildbear.io/uploads/medium_Untitled_96_795e9e80e8.png 750w,https://strapi.buildbear.io/uploads/large_Untitled_96_795e9e80e8.png 1000w," sizes="100vw"></figure>Lending 50 ARB tokens reduced the Supply APR from 10.33% to 6.19% and the Borrow APR from 26.74% to 21.33% because the increased liquidity in the pool resulted in a decreased demand for borrowing ARB tokens. and the pool's Utilization rate decreased from 38% to 29% since a smaller portion of the available liquidity was being utilized by borrowers.<figure class="image image_resized" style="width:75%;"><img src="https://strapi.buildbear.io/uploads/Untitled_97_86fb34de5d.png" alt="Untitled (97).png" srcset="https://strapi.buildbear.io/uploads/thumbnail_Untitled_97_86fb34de5d.png 245w,https://strapi.buildbear.io/uploads/small_Untitled_97_86fb34de5d.png 500w,https://strapi.buildbear.io/uploads/medium_Untitled_97_86fb34de5d.png 750w,https://strapi.buildbear.io/uploads/large_Untitled_97_86fb34de5d.png 1000w," sizes="100vw"></figure>5. Borrowing WETH From A177 WETH / USDC pool&nbsp;<ul style="list-style-type:disc;"><li>Provided 100USDC as collateral, and borrow 0.02WETH from the pool.</li></ul>Resulting Changes:<ul><li>Supply APR increases from 1.15% to 9.15%.</li><li>The utilization rate of the pool changes from 20% to 60%.</li><li>Borrow APR changes from 5.75% to 15.25%.</li></ul><figure class="image image_resized" style="width:75%;"><img src="https://strapi.buildbear.io/uploads/Untitled_98_8053a1c332.png" alt="Untitled (98).png" srcset="https://strapi.buildbear.io/uploads/thumbnail_Untitled_98_8053a1c332.png 245w,https://strapi.buildbear.io/uploads/small_Untitled_98_8053a1c332.png 500w,https://strapi.buildbear.io/uploads/medium_Untitled_98_8053a1c332.png 750w,https://strapi.buildbear.io/uploads/large_Untitled_98_8053a1c332.png 1000w," sizes="100vw"></figure>The REAL TestTo accurately assess the actual amount we would receive, we Advanced the time for a year using the BuildBear utility tools (again available as a part of the BuildBear <code>premium account</code> services) This allowed us to simulate the passage of time and evaluate the final outcomes more realistically.<figure class="image"><img src="https://strapi.buildbear.io/uploads/Untitled_design_12_b8817fdcda.gif" alt="Untitled_design_(12).gif"></figure>Repaying the Borrow positions<figure class="image image_resized" style="width:75%;"><img src="https://strapi.buildbear.io/uploads/Untitled_99_3040384a10.png" alt="Untitled (99).png" srcset="https://strapi.buildbear.io/uploads/thumbnail_Untitled_99_3040384a10.png 245w,https://strapi.buildbear.io/uploads/small_Untitled_99_3040384a10.png 500w,https://strapi.buildbear.io/uploads/medium_Untitled_99_3040384a10.png 750w,https://strapi.buildbear.io/uploads/large_Untitled_99_3040384a10.png 1000w," sizes="100vw"></figure>6. Repaying Borrowed USDT from the A196 Pool&nbsp; For the 150 USDT borrowed, the net amount required to repay is 164.66 USDT.7. Repaying Borrowed WETH from A177 Pool&nbsp;For the 0.02 WETH borrowed, the net amount required to repay is 0.023 WETH.Claiming Lending Positions8. Claiming the lending position from the A196 pool:<ul><li>We withdrew 214.66 USDT.</li><li>After a year, the initial 200 USDT we lent earned 14.66 USDT.</li></ul>9. Claiming the lending position from the A91 pool:<ul><li>We withdrew 53.11 ARB.</li><li>After a year, the initial 50 ARB we lent earned 3.11 ARB.</li></ul>&nbsp;Lent Transactions<figure class="table"><table><thead><tr><th>Lent Amount</th><th>Net Amount After One Year</th><th>APR Presented by Surge-fi Protocol</th><th>APR Based on Amount Received</th></tr></thead><tbody><tr><td>200 USDT</td><td>214.66 USDT</td><td>7.3%</td><td>7.3%</td></tr><tr><td>50 ARB</td><td>53.11 ARB</td><td>6.19%</td><td>6.11%</td></tr></tbody></table></figure>Borrow Transactions<figure class="table"><table><thead><tr><th>Collateral Amount</th><th>Borrowed Amount</th><th>Net Amount to Repay After One Year</th><th>APR Presented by Surge-fi</th><th>APR Based on Amount Repaid</th></tr></thead><tbody><tr><td>1 WBTC</td><td>150 USDT</td><td>164.66 USDT</td><td>9.7%</td><td>9.7%</td></tr><tr><td>100 USDC</td><td>0.02 WETH</td><td>0.023 WETH</td><td>15%</td><td>15%</td></tr></tbody></table></figure>In Conclusion:The tables above demonstrate that the projected APY values by Surge-fi match the received APY, indicating the accuracy of the Surge-fi.We were able to accomplish this by using BuildBear, which allowed us to manipulate time and fast-forward it by one year. This approach helped us accurately assess the actual amounts we would receive in these transactions.Leverage BuildBear for Quality AssuranceIf you are a DeFi Web3 App seeking to:<ul><li>Establish an internal QA Environment for your team, or</li><li>Develop a private testing environment for your community prior to Mainnet release,</li></ul>Feel free to reach out to us at&nbsp;<a href="mailto:team@buildbear.io">team@buildbear.io</a>. We are here to assist you in creating a fully customized testing environment tailored to your needs, ensuring a seamless experience.NOTE:&nbsp;The information provided in this article should not be considered financial advice.

Edge-to-Edge Testing of Surge-fi Protocol: A Comprehensive Review

Let’s get started then, Shall we?

Let’s get started then, Shall we?

Test DApps at Scale.