Break circularity in TypeBounds with LazyRef wraps

compiler/src/dotty/tools/dotc/core/ConstraintHandling.scala

@@ -127,7 +127,20 @@ trait ConstraintHandling {
     * of some param when comparing types might lead to infinite recursion. Consider `bounds` instead.
     */
   def fullBounds(param: TypeParamRef)(using Context): TypeBounds =
-    nonParamBounds(param).derivedTypeBounds(fullLowerBound(param), fullUpperBound(param))
+    val lo = wrapRecursiveInLazy(fullLowerBound(param))
+    val hi = wrapRecursiveInLazy(fullUpperBound(param))
+    nonParamBounds(param).derivedTypeBounds(lo, hi)
+
+  def wrapRecursiveInLazy(tp: Type)(using Context) =
+    if IsRecursiveAccumulator()(false, tp) then LazyRef.of(tp)
+    else tp
+
+  class IsRecursiveAccumulator(using Context) extends TypeAccumulator[Boolean]:
+    private val seen = scala.collection.mutable.HashSet.empty[Type]
+    def apply(x: Boolean, tp: Type): Boolean = x || tp.match
+      case tp: LazyRef               => false
+      case tp @ TypeRef(NoPrefix, _) => if seen.add(tp) then apply(false, tp.info) else true
+      case _                         => foldOver(false, tp)
 
   /** An approximating map that prevents types nested deeper than maxLevel as
    *  well as WildcardTypes from leaking into the constraint.

tests/pos-deep-subtype/i14287.scala

@@ -0,0 +1,15 @@
+enum Free[+F[_], A]:
+  case Return(a: A)
+  case Suspend(s: F[A])
+  case FlatMap[F[_], A, B](
+    s: Free[F, A],
+    f: A => Free[F, B]) extends Free[F, B]
+
+  def flatMap[F2[x] >: F[x], B](f: A => Free[F2,B]): Free[F2,B] =
+    FlatMap(this, f)
+
+  @annotation.tailrec
+  final def step: Free[F, A] = this match
+    case FlatMap(FlatMap(fx, f), g) => fx.flatMap(x => f(x).flatMap(y => g(y))).step
+    case FlatMap(Return(x), f) => f(x).step
+    case _ => this

tests/pos/i14287.min.scala

@@ -0,0 +1,6 @@
+enum Foo[+H[_]]:
+  case Bar[F[_]](f: Foo[F]) extends Foo[F]
+
+  def test: Foo[H] = this match
+    case Bar(Bar(f)) => Bar(f)
+    case _           => this