fix(contracts): add rebasing compatibility for HypERC4626 (#4524)

### Description

- Added overrides for transferFrom, totalSupply to reflect the internal
share based accounting for the 4626 mirror asset

### Drive-by changes

- Overridden `_transfer` to update the Transfer event to display the
asset being transfers as amount not the internal shares.

### Related issues

- fixes chainlight-io/2024-08-hyperlane#6

### Backward compatibility

Yes

### Testing

Fuzz testing

.changeset/real-starfishes-fold.md

@@ -0,0 +1,5 @@
+---
+'@hyperlane-xyz/core': patch
+---
+
+Added overrides for transferFrom, totalSupply to reflect the internal share based accounting for the 4626 mirror asset

solidity/contracts/token/extensions/HypERC4626.sol

@@ -22,10 +22,13 @@ import {TokenRouter} from "../libs/TokenRouter.sol";
 
 // ============ External Imports ============
 import {Math} from "@openzeppelin/contracts/utils/math/Math.sol";
+import {IERC20} from "@openzeppelin/contracts/token/ERC20/IERC20.sol";
+import {ERC20Upgradeable} from "@openzeppelin/contracts-upgradeable/token/ERC20/ERC20Upgradeable.sol";
 
 /**
  * @title Hyperlane ERC20 Rebasing Token
  * @author Abacus Works
+ * @notice This contract implements a rebasing token that reflects yields from the origin chain
  */
 contract HypERC4626 is HypERC20 {
     using Math for uint256;
@@ -49,6 +52,67 @@ contract HypERC4626 is HypERC20 {
         _disableInitializers();
     }
 
+    // ============ Public Functions ============
+
+    /// Override transfer to handle underlying amounts while using shares internally
+    /// @inheritdoc ERC20Upgradeable
+    /// @dev the Transfer event emitted from ERC20Upgradeable will be in terms of shares not assets, so it may be misleading
+    function transfer(
+        address to,
+        uint256 amount
+    ) public virtual override returns (bool) {
+        _transfer(_msgSender(), to, assetsToShares(amount));
+        return true;
+    }
+
+    /// Override transferFrom to handle underlying amounts while using shares internally
+    /// @inheritdoc ERC20Upgradeable
+    function transferFrom(
+        address sender,
+        address recipient,
+        uint256 amount
+    ) public virtual override returns (bool) {
+        address spender = _msgSender();
+        uint256 shares = assetsToShares(amount);
+        _spendAllowance(sender, spender, amount);
+        _transfer(sender, recipient, shares);
+        return true;
+    }
+
+    /// Override totalSupply to return the total assets instead of shares. This reflects the actual circulating supply in terms of assets, accounting for rebasing
+    /// @inheritdoc ERC20Upgradeable
+    function totalSupply() public view virtual override returns (uint256) {
+        return sharesToAssets(totalShares());
+    }
+
+    /// This returns the balance of the account in terms of assets, accounting for rebasing
+    /// @inheritdoc ERC20Upgradeable
+    function balanceOf(
+        address account
+    ) public view virtual override returns (uint256) {
+        return sharesToAssets(shareBalanceOf(account));
+    }
+
+    /// This function provides the total supply in terms of shares
+    function totalShares() public view returns (uint256) {
+        return super.totalSupply();
+    }
+
+    ///  This returns the balance of the account in terms of shares
+    function shareBalanceOf(address account) public view returns (uint256) {
+        return super.balanceOf(account);
+    }
+
+    function assetsToShares(uint256 _amount) public view returns (uint256) {
+        return _amount.mulDiv(PRECISION, exchangeRate);
+    }
+
+    function sharesToAssets(uint256 _shares) public view returns (uint256) {
+        return _shares.mulDiv(exchangeRate, PRECISION);
+    }
+
+    // ============ Internal Functions ============
+
     /// Override to send shares instead of assets from synthetic
     /// @inheritdoc TokenRouter
     function _transferRemote(
@@ -78,6 +142,8 @@ contract HypERC4626 is HypERC20 {
         emit SentTransferRemote(_destination, _recipient, _amountOrId);
     }
 
+    /// override _handle to update exchange rate
+    /// @inheritdoc TokenRouter
     function _handle(
         uint32 _origin,
         bytes32 _sender,
@@ -97,33 +163,4 @@ contract HypERC4626 is HypERC20 {
         }
         super._handle(_origin, _sender, _message);
     }
-
-    // Override to send shares locally instead of assets
-    function transfer(
-        address to,
-        uint256 amount
-    ) public virtual override returns (bool) {
-        address owner = _msgSender();
-        _transfer(owner, to, assetsToShares(amount));
-        return true;
-    }
-
-    function shareBalanceOf(address account) public view returns (uint256) {
-        return super.balanceOf(account);
-    }
-
-    function balanceOf(
-        address account
-    ) public view virtual override returns (uint256) {
-        uint256 _balance = super.balanceOf(account);
-        return sharesToAssets(_balance);
-    }
-
-    function assetsToShares(uint256 _amount) public view returns (uint256) {
-        return _amount.mulDiv(PRECISION, exchangeRate);
-    }
-
-    function sharesToAssets(uint256 _shares) public view returns (uint256) {
-        return _shares.mulDiv(exchangeRate, PRECISION);
-    }
 }

solidity/test/token/HypERC4626Test.t.sol

@@ -113,6 +113,11 @@ contract HypERC4626CollateralTest is HypTokenTest {
         _connectRouters(domains, addresses);
     }
 
+    function testDisableInitializers() public {
+        vm.expectRevert("Initializable: contract is already initialized");
+        remoteToken.initialize(0, "", "", address(0), address(0), address(0));
+    }
+
     function test_collateralDomain() public view {
         assertEq(
             remoteRebasingToken.collateralDomain(),
@@ -242,6 +247,108 @@ contract HypERC4626CollateralTest is HypTokenTest {
         );
     }
 
+    function testTransferFrom() public {
+        _performRemoteTransferWithoutExpectation(0, transferAmount);
+        assertEq(remoteToken.balanceOf(BOB), transferAmount);
+
+        uint256 transferAmount2 = 50e18;
+        vm.prank(BOB);
+        remoteToken.approve(CAROL, transferAmount2);
+
+        vm.prank(CAROL);
+        bool success = remoteToken.transferFrom(BOB, DANIEL, transferAmount2);
+        assertTrue(success, "TransferFrom should succeed");
+
+        assertEq(
+            remoteToken.balanceOf(BOB),
+            transferAmount - transferAmount2,
+            "BOB's balance should decrease"
+        );
+        assertEq(
+            remoteToken.balanceOf(DANIEL),
+            transferAmount2,
+            "DANIEL's balance should increase"
+        );
+        assertEq(
+            remoteToken.allowance(BOB, CAROL),
+            0,
+            "Allowance should be zero after transfer"
+        );
+    }
+
+    event Transfer(address indexed from, address indexed to, uint256 value);
+
+    function testTransferEvent() public {
+        _performRemoteTransferWithoutExpectation(0, transferAmount);
+        assertEq(remoteToken.balanceOf(BOB), transferAmount);
+
+        uint256 transferAmount2 = 50e18;
+        vm.expectEmit(true, true, false, true);
+        emit Transfer(BOB, CAROL, transferAmount2);
+
+        vm.prank(BOB);
+        remoteToken.transfer(CAROL, transferAmount2);
+
+        assertEq(
+            remoteToken.balanceOf(BOB),
+            transferAmount - transferAmount2,
+            "BOB's balance should decrease"
+        );
+        assertEq(
+            remoteToken.balanceOf(CAROL),
+            transferAmount2,
+            "CAROL's balance should increase"
+        );
+    }
+
+    function testTotalShares() public {
+        uint256 initialShares = remoteRebasingToken.totalShares();
+        assertEq(initialShares, 0, "Initial shares should be zero");
+
+        _performRemoteTransferWithoutExpectation(0, transferAmount);
+        uint256 sharesAfterTransfer = remoteRebasingToken.totalShares();
+        assertEq(
+            sharesAfterTransfer,
+            remoteRebasingToken.assetsToShares(transferAmount),
+            "Shares should match transferred amount converted to shares"
+        );
+
+        _accrueYield();
+        localRebasingToken.rebase(DESTINATION, bytes(""), address(0));
+        remoteMailbox.processNextInboundMessage();
+
+        uint256 sharesAfterYield = remoteRebasingToken.totalShares();
+        assertEq(
+            sharesAfterYield,
+            sharesAfterTransfer,
+            "Total shares should remain constant after yield accrual"
+        );
+    }
+
+    function testShareBalanceOf() public {
+        _performRemoteTransferWithoutExpectation(0, transferAmount);
+
+        uint256 bobShareBalance = remoteRebasingToken.shareBalanceOf(BOB);
+        assertEq(
+            bobShareBalance,
+            remoteRebasingToken.assetsToShares(transferAmount),
+            "Bob's share balance should match transferred amount converted to shares"
+        );
+
+        _accrueYield();
+        localRebasingToken.rebase(DESTINATION, bytes(""), address(0));
+        remoteMailbox.processNextInboundMessage();
+
+        uint256 bobShareBalanceAfterYield = remoteRebasingToken.shareBalanceOf(
+            BOB
+        );
+        assertEq(
+            bobShareBalanceAfterYield,
+            bobShareBalance,
+            "Bob's share balance should remain constant after yield accrual"
+        );
+    }
+
     function testWithdrawalWithoutYield() public {
         uint256 bobPrimaryBefore = primaryToken.balanceOf(BOB);
         _performRemoteTransferWithoutExpectation(0, transferAmount);
@@ -480,6 +587,32 @@ contract HypERC4626CollateralTest is HypTokenTest {
         );
     }
 
+    function testTotalSupply() public {
+        uint256 initialSupply = remoteToken.totalSupply();
+        assertEq(initialSupply, 0, "Initial supply should be zero");
+
+        _performRemoteTransferWithoutExpectation(0, transferAmount);
+        uint256 supplyAfterTransfer = remoteToken.totalSupply();
+        assertEq(
+            supplyAfterTransfer,
+            transferAmount,
+            "Supply should match transferred amount"
+        );
+
+        _accrueYield();
+        localRebasingToken.rebase(DESTINATION, bytes(""), address(0));
+        remoteMailbox.processNextInboundMessage();
+
+        uint256 supplyAfterYield = remoteToken.totalSupply();
+        assertApproxEqRelDecimal(
+            supplyAfterYield,
+            transferAmount + _discountedYield(),
+            1e14,
+            0,
+            "Supply should include yield"
+        );
+    }
+
     function testTransfer_withHookSpecified(
         uint256,
         bytes calldata

typescript/sdk/src/token/EvmERC20WarpRouteReader.hardhat-test.ts

@@ -174,7 +174,6 @@ describe('ERC20WarpRouterReader', async () => {
         name: TOKEN_NAME,
         symbol: TOKEN_NAME,
         decimals: TOKEN_DECIMALS,
-        totalSupply: TOKEN_SUPPLY,
         ...baseConfig,
       },
     };

typescript/sdk/src/token/deploy.ts

@@ -88,8 +88,10 @@ abstract class TokenDeployer<
     ];
     if (isCollateralConfig(config) || isNativeConfig(config)) {
       return defaultArgs;
-    } else if (isSyntheticConfig(config) || isSyntheticRebaseConfig(config)) {
+    } else if (isSyntheticConfig(config)) {
       return [config.totalSupply, config.name, config.symbol, ...defaultArgs];
+    } else if (isSyntheticRebaseConfig(config)) {
+      return [0, config.name, config.symbol, ...defaultArgs];
     } else {
       throw new Error('Unknown collateral type when initializing arguments');
     }

typescript/sdk/src/token/schemas.ts

@@ -40,8 +40,11 @@ export const NativeConfigSchema = TokenMetadataSchema.partial().extend({
   type: z.enum([TokenType.native, TokenType.nativeScaled]),
 });
 
-export const CollateralRebaseConfigSchema =
-  TokenMetadataSchema.partial().extend({
+export const CollateralRebaseConfigSchema = TokenMetadataSchema.omit({
+  totalSupply: true,
+})
+  .partial()
+  .extend({
     type: z.literal(TokenType.collateralVaultRebase),
   });