From 78eee2698a40f0f67b9f2f1ae8428167c410c436 Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Fri, 8 Mar 2024 14:37:09 -0500
Subject: [PATCH 01/13] In progress changes.

---
 .../subaccounts/keeper/isolated_subaccount.go | 141 ++++++++++++++++++
 protocol/x/subaccounts/keeper/subaccount.go   |   7 +
 protocol/x/subaccounts/types/errors.go        |   6 +
 protocol/x/subaccounts/types/update.go        |  12 +-
 protocol/x/subaccounts/types/update_test.go   |   6 +-
 5 files changed, 166 insertions(+), 6 deletions(-)
 create mode 100644 protocol/x/subaccounts/keeper/isolated_subaccount.go

diff --git a/protocol/x/subaccounts/keeper/isolated_subaccount.go b/protocol/x/subaccounts/keeper/isolated_subaccount.go
new file mode 100644
index 0000000000..0bd57456d9
--- /dev/null
+++ b/protocol/x/subaccounts/keeper/isolated_subaccount.go
@@ -0,0 +1,141 @@
+package keeper
+
+import (
+	errorsmod "cosmossdk.io/errors"
+	sdk "github.com/cosmos/cosmos-sdk/types"
+	"github.com/dydxprotocol/v4-chain/protocol/lib"
+	perptypes "github.com/dydxprotocol/v4-chain/protocol/x/perpetuals/types"
+	"github.com/dydxprotocol/v4-chain/protocol/x/subaccounts/types"
+)
+
+// checkIsolatedSubaccountConstaints will validate all `updates` to the relevant subaccounts against
+// isolated subaccount constraints.
+// The `updates` have to contain `Subaccounts` with unique `SubaccountIds`.
+// The input subaccounts must be settled.
+//
+// Returns a `success` value of `true` if all updates are valid.
+// Returns a `successPerUpdates` value, which is a slice of `UpdateResult`.
+// These map to the updates and are used to indicate which of the updates
+// caused a failure, if any.
+func (k Keeper) checkIsolatedSubaccountConstraints(
+	ctx sdk.Context,
+	settledUpdates []settledUpdate,
+	perpetuals []perptypes.Perpetual,
+) (
+	success bool,
+	successPerUpdate []types.UpdateResult,
+	err error,
+) {
+	success = true
+	successPerUpdate = make([]types.UpdateResult, len(settledUpdates))
+	var idOfSettledUpdates = make(map[types.SubaccountId]struct{})
+	var perpIdToMarketType = make(map[uint32]perptypes.PerpetualMarketType)
+
+	for _, perpetual := range perpetuals {
+		perpIdToMarketType[perpetual.GetId()] = perpetual.Params.MarketType
+	}
+
+	for i, u := range settledUpdates {
+		_, exists := idOfSettledUpdates[*u.SettledSubaccount.Id]
+
+		if exists {
+			return false, nil, types.ErrNonUniqueUpdatesSubaccount
+		}
+
+		result, err := isValidIsolatedPerpetualUpdates(u, perpIdToMarketType)
+		if err != nil {
+			return false, nil, err
+		}
+		if result != types.Success {
+			success = false
+		}
+
+		successPerUpdate[i] = result
+		idOfSettledUpdates[*u.SettledSubaccount.Id] = struct{}{}
+	}
+
+	return success, successPerUpdate, nil
+}
+
+// Checks whether the perpetual updates to a settled subaccount violates constraints for isolated
+// perpetuals. This function assumes the settled subaccount is valid and does not violate the
+// the constraints.
+// The constraint being checked is:
+// - the subaccount after the update cannot have a perpetual position in multiple perpetuals where
+// one of the perpetuals is an isolated perpetual
+func isValidIsolatedPerpetualUpdates(
+	settledUpdate settledUpdate,
+	perpIdToMarketType map[uint32]perptypes.PerpetualMarketType,
+) (types.UpdateResult, error) {
+	// If there are no perpetual updates, then this update does not violate constraints for isolated
+	// markets.
+	if len(settledUpdate.PerpetualUpdates) == 0 {
+		return types.Success, nil
+	}
+
+	// Check if the updates contain an update to an isolated perpetual.
+	hasIsolatedUpdate := false
+	isolatedUpdatePerpetualId := uint32(0)
+	for _, perpetualUpdate := range settledUpdate.PerpetualUpdates {
+		marketType, exists := perpIdToMarketType[perpetualUpdate.PerpetualId]
+		if !exists {
+			return types.UpdateCausedError, errorsmod.Wrap(
+				perptypes.ErrPerpetualDoesNotExist, lib.UintToString(perpetualUpdate.PerpetualId),
+			)
+		}
+
+		if marketType == perptypes.PerpetualMarketType_PERPETUAL_MARKET_TYPE_ISOLATED {
+			hasIsolatedUpdate = true
+			isolatedUpdatePerpetualId = perpetualUpdate.PerpetualId
+		}
+	}
+
+	// Check if the subaccount has a position in an isolated perpetual.
+	// Assumes the subaccount itself does not violate the isolated perpetual constraints.
+	isIsolatedSubaccount := false
+	isolatedPositionPerpetualId := uint32(0)
+	hasPerpetualPositions := len(settledUpdate.SettledSubaccount.PerpetualPositions) > 0
+	for _, perpetualPosition := range settledUpdate.SettledSubaccount.PerpetualPositions {
+		marketType, exists := perpIdToMarketType[perpetualPosition.PerpetualId]
+		if !exists {
+			return types.UpdateCausedError, errorsmod.Wrap(
+				perptypes.ErrPerpetualDoesNotExist, lib.UintToString(perpetualPosition.PerpetualId),
+			)
+		}
+
+		if marketType == perptypes.PerpetualMarketType_PERPETUAL_MARKET_TYPE_ISOLATED {
+			isIsolatedSubaccount = true
+			isolatedPositionPerpetualId = perpetualPosition.PerpetualId
+		}
+	}
+
+	// A subaccount with a perpetual position in an isolated perpetual cannot have updates to other
+	// non-isolated perpetuals.
+	if isIsolatedSubaccount && !hasIsolatedUpdate {
+		return types.ViolatesIsolatedSubaccountConstraints, nil
+	}
+
+	// A subaccount with perpetual positions in non-isolated perpetuals cannot have an update
+	// to an isolated perpetual.
+	if !isIsolatedSubaccount && hasPerpetualPositions && hasIsolatedUpdate {
+		return types.ViolatesIsolatedSubaccountConstraints, nil
+	}
+
+	// There cannot be more than a single perpetual update if an update to an isolated perpetual
+	// exists in the slice of perpetual updates.
+	if hasIsolatedUpdate && len(settledUpdate.PerpetualUpdates) > 1 {
+		return types.ViolatesIsolatedSubaccountConstraints, nil
+	}
+
+	// Note  we can assume that if `hasIsolatedUpdate` is true, there is only a single perpetual
+	// update for the subaccount, given the above check.
+	// A subaccount with a perpetual position in an isolated perpetual cannot have an update to
+	// another isolated perpetual.
+	if isIsolatedSubaccount &&
+		hasIsolatedUpdate &&
+		isolatedPositionPerpetualId != isolatedUpdatePerpetualId {
+		return types.ViolatesIsolatedSubaccountConstraints, nil
+	}
+
+	return types.Success, nil
+}
diff --git a/protocol/x/subaccounts/keeper/subaccount.go b/protocol/x/subaccounts/keeper/subaccount.go
index c881a48064..f773d92f33 100644
--- a/protocol/x/subaccounts/keeper/subaccount.go
+++ b/protocol/x/subaccounts/keeper/subaccount.go
@@ -292,6 +292,13 @@ func (k Keeper) UpdateSubaccounts(
 		perpIdToFundingIndex[perp.Params.Id] = perp.FundingIndex
 	}
 
+	// Check if the updates satisfy the isolated perpetual constraints.
+	success, successPerUpdate, err = k.checkIsolatedSubaccountConstraints(
+		ctx, settledUpdates, allPerps)
+	if !success || err != nil {
+		return success, successPerUpdate, err
+	}
+
 	// Apply the updates to perpetual positions.
 	UpdatePerpetualPositions(
 		settledUpdates,
diff --git a/protocol/x/subaccounts/types/errors.go b/protocol/x/subaccounts/types/errors.go
index 12af34a0a7..78da2e05a6 100644
--- a/protocol/x/subaccounts/types/errors.go
+++ b/protocol/x/subaccounts/types/errors.go
@@ -38,4 +38,10 @@ var (
 		ModuleName, 500, "asset transfer quantums is not positive")
 	ErrAssetTransferThroughBankNotImplemented = errorsmod.Register(
 		ModuleName, 501, "asset transfer (other than USDC) through the bank module is not implemented")
+
+	// 600 - 699: isolated markets related.
+	ErrFailedToUpdateIsolatedSubaccount = errorsmod.Register(
+		ModuleName, 600, "failed to update subaccount with perpetual position in isolated market")
+	ErrMixedIsolatedCrossUpdatesNotSupported = errorsmod.Register(
+		ModuleName, 601, "updating isolated and cross perpetual positions is not supported")
 )
diff --git a/protocol/x/subaccounts/types/update.go b/protocol/x/subaccounts/types/update.go
index d700bb1541..684b618b28 100644
--- a/protocol/x/subaccounts/types/update.go
+++ b/protocol/x/subaccounts/types/update.go
@@ -52,11 +52,12 @@ func GetErrorFromUpdateResults(
 }
 
 var updateResultStringMap = map[UpdateResult]string{
-	Success:                        "Success",
-	NewlyUndercollateralized:       "NewlyUndercollateralized",
-	StillUndercollateralized:       "StillUndercollateralized",
-	WithdrawalsAndTransfersBlocked: "WithdrawalsAndTransfersBlocked",
-	UpdateCausedError:              "UpdateCausedError",
+	Success:                               "Success",
+	NewlyUndercollateralized:              "NewlyUndercollateralized",
+	StillUndercollateralized:              "StillUndercollateralized",
+	WithdrawalsAndTransfersBlocked:        "WithdrawalsAndTransfersBlocked",
+	UpdateCausedError:                     "UpdateCausedError",
+	ViolatesIsolatedSubaccountConstraints: "ViolatesIsolatedSubaccountConstraints",
 }
 
 const (
@@ -65,6 +66,7 @@ const (
 	StillUndercollateralized
 	WithdrawalsAndTransfersBlocked
 	UpdateCausedError
+	ViolatesIsolatedSubaccountConstraints
 )
 
 // Update is used by the subaccounts keeper to allow other modules
diff --git a/protocol/x/subaccounts/types/update_test.go b/protocol/x/subaccounts/types/update_test.go
index 153241de08..c4cd9c5e74 100644
--- a/protocol/x/subaccounts/types/update_test.go
+++ b/protocol/x/subaccounts/types/update_test.go
@@ -88,8 +88,12 @@ func TestUpdateResultString(t *testing.T) {
 			value:          types.UpdateCausedError,
 			expectedResult: "UpdateCausedError",
 		},
+		"ViolatesIsolatedSubaccountConstraints": {
+			value:          types.ViolatesIsolatedSubaccountConstraints,
+			expectedResult: "ViolatesIsolatedSubaccountConstraints",
+		},
 		"UnexpectedError": {
-			value:          types.UpdateResult(5),
+			value:          types.UpdateResult(6),
 			expectedResult: "UnexpectedError",
 		},
 	}

From 151a5d78e29042ab0cb7e83c2ff48801882ef811 Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Fri, 8 Mar 2024 15:37:15 -0500
Subject: [PATCH 02/13] [TRA-68] Check isolated market constraints in
 UpdateSubaccount.

---
 protocol/testutil/constants/perpetuals.go     |  12 ++
 protocol/testutil/constants/pricefeed.go      |   1 +
 protocol/testutil/constants/prices.go         |  26 +++
 .../pricefeed/exchange_config/market_id.go    |   5 +-
 .../subaccounts/keeper/isolated_subaccount.go |   7 +-
 .../x/subaccounts/keeper/subaccount_test.go   | 180 ++++++++++++++++++
 6 files changed, 227 insertions(+), 4 deletions(-)

diff --git a/protocol/testutil/constants/perpetuals.go b/protocol/testutil/constants/perpetuals.go
index 2069fe0e65..89f31f62f1 100644
--- a/protocol/testutil/constants/perpetuals.go
+++ b/protocol/testutil/constants/perpetuals.go
@@ -327,6 +327,18 @@ var (
 		},
 		FundingIndex: dtypes.ZeroInt(),
 	}
+	Iso2Usd_IsolatedMarket = perptypes.Perpetual{
+		Params: perptypes.PerpetualParams{
+			Id:                4,
+			Ticker:            "ISO2-USD",
+			MarketId:          uint32(4),
+			AtomicResolution:  int32(-7),
+			DefaultFundingPpm: int32(0),
+			LiquidityTier:     uint32(3),
+			MarketType:        perptypes.PerpetualMarketType_PERPETUAL_MARKET_TYPE_ISOLATED,
+		},
+		FundingIndex: dtypes.ZeroInt(),
+	}
 )
 
 var TestMarketPerpetuals = []perptypes.Perpetual{
diff --git a/protocol/testutil/constants/pricefeed.go b/protocol/testutil/constants/pricefeed.go
index 47df2ae63a..e8ae1399c0 100644
--- a/protocol/testutil/constants/pricefeed.go
+++ b/protocol/testutil/constants/pricefeed.go
@@ -14,6 +14,7 @@ var (
 	MarketId1 = uint32(1)
 	MarketId2 = uint32(2)
 	MarketId3 = uint32(3)
+	MarketId4 = uint32(4)
 
 	MarketId7  = uint32(7)
 	MarketId8  = uint32(8)
diff --git a/protocol/testutil/constants/prices.go b/protocol/testutil/constants/prices.go
index 022d1793c5..abd04a8fbc 100644
--- a/protocol/testutil/constants/prices.go
+++ b/protocol/testutil/constants/prices.go
@@ -27,6 +27,7 @@ const (
 	SolUsdPair   = "SOL-USD"
 	LtcUsdPair   = "LTC-USD"
 	IsoUsdPair   = "ISO-USD"
+	Iso2UsdPair  = "ISO2-USD"
 
 	BtcUsdExponent   = -5
 	EthUsdExponent   = -6
@@ -36,6 +37,7 @@ const (
 	SolUsdExponent   = -8
 	LtcUsdExponent   = -7
 	IsoUsdExponent   = -8
+	Iso2UsdExponent  = -7
 
 	CoinbaseExchangeName  = "Coinbase"
 	BinanceExchangeName   = "Binance"
@@ -212,6 +214,15 @@ var TestMarketExchangeConfigs = map[pricefeedclient.MarketId]string{
 		  }
 		]
 	  }`,
+	exchange_config.MARKET_ISO2_USD: `{
+			"exchanges": [
+				{
+				"exchangeName": "Binance",
+				"ticker": "ISO2USDT",
+				"adjustByMarket": "USDT-USD"
+				}
+			]
+			}`,
 }
 
 var TestMarketParams = []types.MarketParam{
@@ -247,6 +258,14 @@ var TestMarketParams = []types.MarketParam{
 		MinPriceChangePpm:  50,
 		ExchangeConfigJson: TestMarketExchangeConfigs[exchange_config.MARKET_ISO_USD],
 	},
+	{
+		Id:                 4,
+		Pair:               Iso2UsdPair,
+		Exponent:           Iso2UsdExponent,
+		MinExchanges:       1,
+		MinPriceChangePpm:  50,
+		ExchangeConfigJson: TestMarketExchangeConfigs[exchange_config.MARKET_ISO2_USD],
+	},
 }
 
 var TestMarketPrices = []types.MarketPrice{
@@ -270,6 +289,11 @@ var TestMarketPrices = []types.MarketPrice{
 		Exponent: IsoUsdExponent,
 		Price:    FiveBillion, // 50$ == 1 ISO
 	},
+	{
+		Id:       4,
+		Exponent: Iso2UsdExponent,
+		Price:    ThreeBillion, // 300$ == 1 ISO
+	},
 }
 
 var TestMarketIdsToExponents = map[uint32]int32{
@@ -277,6 +301,7 @@ var TestMarketIdsToExponents = map[uint32]int32{
 	1: EthUsdExponent,
 	2: SolUsdExponent,
 	3: IsoUsdExponent,
+	4: Iso2UsdExponent,
 }
 
 var TestPricesGenesisState = types.GenesisState{
@@ -290,6 +315,7 @@ var (
 		types.NewMarketPriceUpdate(MarketId1, Price6),
 		types.NewMarketPriceUpdate(MarketId2, Price7),
 		types.NewMarketPriceUpdate(MarketId3, Price4),
+		types.NewMarketPriceUpdate(MarketId4, Price3),
 	}
 
 	// `MsgUpdateMarketPrices`.
diff --git a/protocol/testutil/daemons/pricefeed/exchange_config/market_id.go b/protocol/testutil/daemons/pricefeed/exchange_config/market_id.go
index 2123f76b1c..cb6fe6c4d6 100644
--- a/protocol/testutil/daemons/pricefeed/exchange_config/market_id.go
+++ b/protocol/testutil/daemons/pricefeed/exchange_config/market_id.go
@@ -75,8 +75,9 @@ const (
 	// MARKET_TEST_USD is the id used for the TEST-USD market pair.
 	MARKET_TEST_USD types.MarketId = 33
 
-	// Arbitrary isolated market
-	MARKET_ISO_USD types.MarketId = 999_999
+	// Arbitrary isolated markets
+	MARKET_ISO2_USD types.MarketId = 999_998
+	MARKET_ISO_USD  types.MarketId = 999_999
 
 	// Non-trading markets.
 	// MARKET_USDT_USD is the id for the USDT-USD market pair.
diff --git a/protocol/x/subaccounts/keeper/isolated_subaccount.go b/protocol/x/subaccounts/keeper/isolated_subaccount.go
index 0bd57456d9..3f8000abff 100644
--- a/protocol/x/subaccounts/keeper/isolated_subaccount.go
+++ b/protocol/x/subaccounts/keeper/isolated_subaccount.go
@@ -61,8 +61,11 @@ func (k Keeper) checkIsolatedSubaccountConstraints(
 // perpetuals. This function assumes the settled subaccount is valid and does not violate the
 // the constraints.
 // The constraint being checked is:
-// - the subaccount after the update cannot have a perpetual position in multiple perpetuals where
-// one of the perpetuals is an isolated perpetual
+//   - a subaccount with a position in an isolated perpetual cannot have updates other perpetuals
+//   - a subaccount with a position in a non-isolated perpetual cannot have updates for isolated
+//     perpetuals
+//   - a subaccount with no positions cannot be updated to have positions in multiple isolated
+//     perpetuals or a combination of isolated and non-isolated perpetuals
 func isValidIsolatedPerpetualUpdates(
 	settledUpdate settledUpdate,
 	perpIdToMarketType map[uint32]perptypes.PerpetualMarketType,
diff --git a/protocol/x/subaccounts/keeper/subaccount_test.go b/protocol/x/subaccounts/keeper/subaccount_test.go
index cd9e3d32e9..a963c77aff 100644
--- a/protocol/x/subaccounts/keeper/subaccount_test.go
+++ b/protocol/x/subaccounts/keeper/subaccount_test.go
@@ -2072,6 +2072,186 @@ func TestUpdateSubaccounts(t *testing.T) {
 			},
 			msgSenderEnabled: true,
 		},
+		"Isolated subaccounts - has update for both an isolated perpetual and non-isolated perpetual": {
+			assetPositions:           testutil.CreateUsdcAssetPosition(big.NewInt(1_000_000_000_000)),
+			expectedSuccess:          false,
+			expectedSuccessPerUpdate: []types.UpdateResult{types.ViolatesIsolatedSubaccountConstraints},
+			perpetuals: []perptypes.Perpetual{
+				constants.BtcUsd_NoMarginRequirement,
+				constants.IsoUsd_IsolatedMarket,
+			},
+			expectedAssetPositions: []*types.AssetPosition{
+				{
+					AssetId:  uint32(0),
+					Quantums: dtypes.NewInt(1_000_000_000_000),
+				},
+			},
+			updates: []types.Update{
+				{
+					PerpetualUpdates: []types.PerpetualUpdate{
+						{
+							PerpetualId:      uint32(0),
+							BigQuantumsDelta: big.NewInt(-100_000_000), // -1 BTC
+						},
+						{
+							PerpetualId:      uint32(3),
+							BigQuantumsDelta: big.NewInt(1_000_000_000), // 1 ISO
+						},
+					},
+				},
+			},
+			msgSenderEnabled: true,
+		},
+		"Isolated subaccounts - has update for both 2 isolated perpetuals": {
+			assetPositions:           testutil.CreateUsdcAssetPosition(big.NewInt(1_000_000_000_000)),
+			expectedSuccess:          false,
+			expectedSuccessPerUpdate: []types.UpdateResult{types.ViolatesIsolatedSubaccountConstraints},
+			perpetuals: []perptypes.Perpetual{
+				constants.IsoUsd_IsolatedMarket,
+				constants.Iso2Usd_IsolatedMarket,
+			},
+			expectedAssetPositions: []*types.AssetPosition{
+				{
+					AssetId:  uint32(0),
+					Quantums: dtypes.NewInt(1_000_000_000_000),
+				},
+			},
+			updates: []types.Update{
+				{
+					PerpetualUpdates: []types.PerpetualUpdate{
+						{
+							PerpetualId:      uint32(3),
+							BigQuantumsDelta: big.NewInt(-1_000_000_000), // 1 ISO
+						},
+						{
+							PerpetualId:      uint32(4),
+							BigQuantumsDelta: big.NewInt(10_000_000), // 1 ISO2
+						},
+					},
+				},
+			},
+			msgSenderEnabled: true,
+		},
+		"Isolated subaccounts - subaccount with isolated perpetual position has update for non-isolated perpetual": {
+			assetPositions:           testutil.CreateUsdcAssetPosition(big.NewInt(1_000_000_000_000)),
+			expectedSuccess:          false,
+			expectedSuccessPerUpdate: []types.UpdateResult{types.ViolatesIsolatedSubaccountConstraints},
+			perpetuals: []perptypes.Perpetual{
+				constants.BtcUsd_NoMarginRequirement,
+				constants.IsoUsd_IsolatedMarket,
+			},
+			perpetualPositions: []*types.PerpetualPosition{
+				{
+					PerpetualId:  uint32(3),
+					Quantums:     dtypes.NewInt(1_000_000_000), // 1 ISO
+					FundingIndex: dtypes.NewInt(0),
+				},
+			},
+			expectedPerpetualPositions: []*types.PerpetualPosition{
+				{
+					PerpetualId:  uint32(3),
+					Quantums:     dtypes.NewInt(1_000_000_000),
+					FundingIndex: dtypes.NewInt(0),
+				},
+			},
+			expectedAssetPositions: []*types.AssetPosition{
+				{
+					AssetId:  uint32(0),
+					Quantums: dtypes.NewInt(1_000_000_000_000),
+				},
+			},
+			updates: []types.Update{
+				{
+					PerpetualUpdates: []types.PerpetualUpdate{
+						{
+							PerpetualId:      uint32(0),
+							BigQuantumsDelta: big.NewInt(-100_000_000), // -1 BTC
+						},
+					},
+				},
+			},
+			msgSenderEnabled: true,
+		},
+		"Isolated subaccounts - subaccount with isolated perpetual position has update for another isolated perpetual": {
+			assetPositions:           testutil.CreateUsdcAssetPosition(big.NewInt(1_000_000_000_000)),
+			expectedSuccess:          false,
+			expectedSuccessPerUpdate: []types.UpdateResult{types.ViolatesIsolatedSubaccountConstraints},
+			perpetuals: []perptypes.Perpetual{
+				constants.IsoUsd_IsolatedMarket,
+				constants.Iso2Usd_IsolatedMarket,
+			},
+			perpetualPositions: []*types.PerpetualPosition{
+				{
+					PerpetualId:  uint32(3),
+					Quantums:     dtypes.NewInt(1_000_000_000), // 1 ISO
+					FundingIndex: dtypes.NewInt(0),
+				},
+			},
+			expectedPerpetualPositions: []*types.PerpetualPosition{
+				{
+					PerpetualId:  uint32(3),
+					Quantums:     dtypes.NewInt(1_000_000_000),
+					FundingIndex: dtypes.NewInt(0),
+				},
+			},
+			expectedAssetPositions: []*types.AssetPosition{
+				{
+					AssetId:  uint32(0),
+					Quantums: dtypes.NewInt(1_000_000_000_000),
+				},
+			},
+			updates: []types.Update{
+				{
+					PerpetualUpdates: []types.PerpetualUpdate{
+						{
+							PerpetualId:      uint32(4),
+							BigQuantumsDelta: big.NewInt(-10_000_000), // -1 ISO2
+						},
+					},
+				},
+			},
+			msgSenderEnabled: true,
+		},
+		"Isolated subaccounts - subaccount with non-isolated perpetual position has update for isolated perpetual": {
+			assetPositions:           testutil.CreateUsdcAssetPosition(big.NewInt(1_000_000_000_000)),
+			expectedSuccess:          false,
+			expectedSuccessPerUpdate: []types.UpdateResult{types.ViolatesIsolatedSubaccountConstraints},
+			perpetuals: []perptypes.Perpetual{
+				constants.BtcUsd_NoMarginRequirement,
+				constants.IsoUsd_IsolatedMarket,
+			},
+			perpetualPositions: []*types.PerpetualPosition{
+				{
+					PerpetualId:  uint32(0),
+					Quantums:     dtypes.NewInt(100_000_000), // 1 BTC
+					FundingIndex: dtypes.NewInt(0),
+				},
+			},
+			expectedPerpetualPositions: []*types.PerpetualPosition{
+				{
+					PerpetualId:  uint32(0),
+					Quantums:     dtypes.NewInt(100_000_000),
+					FundingIndex: dtypes.NewInt(0),
+				},
+			},
+			expectedAssetPositions: []*types.AssetPosition{
+				{
+					AssetId:  uint32(0),
+					Quantums: dtypes.NewInt(1_000_000_000_000),
+				},
+			},
+			updates: []types.Update{
+				{
+					PerpetualUpdates: []types.PerpetualUpdate{
+						{
+							PerpetualId:      uint32(3),
+							BigQuantumsDelta: big.NewInt(-1_000_000_000), // -1 ISO
+						},
+					},
+				},
+			},
+			msgSenderEnabled: true,
+		},
 	}
 
 	for name, tc := range tests {

From 9d996f90b6fe17f6943ead117e954c8bfb4abf71 Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Fri, 8 Mar 2024 15:57:23 -0500
Subject: [PATCH 03/13] Fix price feed.

---
 protocol/testutil/constants/pricefeed.go | 9 +++++++++
 1 file changed, 9 insertions(+)

diff --git a/protocol/testutil/constants/pricefeed.go b/protocol/testutil/constants/pricefeed.go
index e8ae1399c0..f7bdf0e2c2 100644
--- a/protocol/testutil/constants/pricefeed.go
+++ b/protocol/testutil/constants/pricefeed.go
@@ -277,12 +277,19 @@ var (
 				Exchange3_Price3_TimeT,
 			},
 		},
+		{
+			MarketId: MarketId4,
+			ExchangePrices: []*api.ExchangePrice{
+				Exchange3_Price3_TimeT,
+			},
+		},
 	}
 	AtTimeTSingleExchangeSmoothedPrices = map[uint32]uint64{
 		MarketId0: Exchange0_Price4_TimeT.Price,
 		MarketId1: Exchange1_Price1_TimeT.Price,
 		MarketId2: Exchange2_Price2_TimeT.Price,
 		MarketId3: Exchange3_Price3_TimeT.Price,
+		MarketId4: Exchange3_Price3_TimeT.Price,
 	}
 
 	AtTimeTSingleExchangeSmoothedPricesPlus10 = map[uint32]uint64{
@@ -290,6 +297,7 @@ var (
 		MarketId1: Exchange1_Price1_TimeT.Price + 10,
 		MarketId2: Exchange2_Price2_TimeT.Price + 10,
 		MarketId3: Exchange3_Price3_TimeT.Price + 10,
+		MarketId4: Exchange3_Price3_TimeT.Price + 10,
 	}
 
 	AtTimeTSingleExchangeSmoothedPricesPlus7 = map[uint32]uint64{
@@ -297,6 +305,7 @@ var (
 		MarketId1: Exchange1_Price1_TimeT.Price + 7,
 		MarketId2: Exchange2_Price2_TimeT.Price + 7,
 		MarketId3: Exchange3_Price3_TimeT.Price + 7,
+		MarketId4: Exchange3_Price3_TimeT.Price + 7,
 	}
 
 	MixedTimePriceUpdate = []*api.MarketPriceUpdate{

From 104e3b3b6a9b5be198aa002d9cc4ddfa4aeeacf9 Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Fri, 8 Mar 2024 15:59:14 -0500
Subject: [PATCH 04/13] Remove uneeded errors.

---
 protocol/x/subaccounts/types/errors.go | 6 ------
 1 file changed, 6 deletions(-)

diff --git a/protocol/x/subaccounts/types/errors.go b/protocol/x/subaccounts/types/errors.go
index 78da2e05a6..12af34a0a7 100644
--- a/protocol/x/subaccounts/types/errors.go
+++ b/protocol/x/subaccounts/types/errors.go
@@ -38,10 +38,4 @@ var (
 		ModuleName, 500, "asset transfer quantums is not positive")
 	ErrAssetTransferThroughBankNotImplemented = errorsmod.Register(
 		ModuleName, 501, "asset transfer (other than USDC) through the bank module is not implemented")
-
-	// 600 - 699: isolated markets related.
-	ErrFailedToUpdateIsolatedSubaccount = errorsmod.Register(
-		ModuleName, 600, "failed to update subaccount with perpetual position in isolated market")
-	ErrMixedIsolatedCrossUpdatesNotSupported = errorsmod.Register(
-		ModuleName, 601, "updating isolated and cross perpetual positions is not supported")
 )

From 81234152d70c1edaea0396983aec8a0354c50631 Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Fri, 8 Mar 2024 17:07:57 -0500
Subject: [PATCH 05/13] Fix price feed tests.

---
 protocol/testutil/constants/prices.go                 |  2 +-
 .../keeper/msg_server_update_market_prices_test.go    | 11 +++++++++++
 protocol/x/prices/keeper/smoothed_price_test.go       |  5 ++++-
 protocol/x/prices/keeper/update_price_test.go         |  3 +++
 .../keeper/validate_market_price_updates_test.go      |  5 +++--
 5 files changed, 22 insertions(+), 4 deletions(-)

diff --git a/protocol/testutil/constants/prices.go b/protocol/testutil/constants/prices.go
index abd04a8fbc..89c7ee360f 100644
--- a/protocol/testutil/constants/prices.go
+++ b/protocol/testutil/constants/prices.go
@@ -292,7 +292,7 @@ var TestMarketPrices = []types.MarketPrice{
 	{
 		Id:       4,
 		Exponent: Iso2UsdExponent,
-		Price:    ThreeBillion, // 300$ == 1 ISO
+		Price:    ThreeBillion, // 300$ == 1 ISO2
 	},
 }
 
diff --git a/protocol/x/prices/keeper/msg_server_update_market_prices_test.go b/protocol/x/prices/keeper/msg_server_update_market_prices_test.go
index 145d363cbe..ebbf453d33 100644
--- a/protocol/x/prices/keeper/msg_server_update_market_prices_test.go
+++ b/protocol/x/prices/keeper/msg_server_update_market_prices_test.go
@@ -48,6 +48,7 @@ func TestUpdateMarketPrices_Valid(t *testing.T) {
 				constants.MarketId1: constants.ThreeBillion, // no change
 				constants.MarketId2: constants.FiveBillion,  // no change
 				constants.MarketId3: constants.FiveBillion,  // no change
+				constants.MarketId4: constants.ThreeBillion, // no change
 			},
 		},
 		"Multiple updates": {
@@ -58,6 +59,7 @@ func TestUpdateMarketPrices_Valid(t *testing.T) {
 				constants.MarketId1: constants.Price6,
 				constants.MarketId2: constants.Price7,
 				constants.MarketId3: constants.Price4,
+				constants.MarketId4: constants.Price3,
 			},
 		},
 		"Towards index price = true (current < update < index price)": {
@@ -81,6 +83,7 @@ func TestUpdateMarketPrices_Valid(t *testing.T) {
 				constants.MarketId1: constants.ThreeBillion, // no change
 				constants.MarketId2: constants.FiveBillion,  // no change
 				constants.MarketId3: constants.FiveBillion,  // no change
+				constants.MarketId4: constants.ThreeBillion, // no change
 			},
 		},
 		"Index price crossing = true (price increase), old_ticks > 1, new_ticks <= sqrt(old_ticks) = true": {
@@ -104,6 +107,7 @@ func TestUpdateMarketPrices_Valid(t *testing.T) {
 				constants.MarketId1: constants.ThreeBillion, // no change
 				constants.MarketId2: constants.FiveBillion,  // no change
 				constants.MarketId3: constants.FiveBillion,  // no change
+				constants.MarketId4: constants.ThreeBillion, // no change
 			},
 		},
 		"Index price crossing = true (price decrease), old_ticks > 1, new_ticks <= sqrt(old_ticks) = true": {
@@ -127,6 +131,7 @@ func TestUpdateMarketPrices_Valid(t *testing.T) {
 				constants.MarketId1: constants.ThreeBillion, // no change
 				constants.MarketId2: constants.FiveBillion,  // no change
 				constants.MarketId3: constants.FiveBillion,  // no change
+				constants.MarketId4: constants.ThreeBillion, // no change
 			},
 		},
 		"Index price crossing = true (price increase), old_ticks <= 1, new_ticks <= old_ticks = true": {
@@ -150,6 +155,7 @@ func TestUpdateMarketPrices_Valid(t *testing.T) {
 				constants.MarketId1: constants.ThreeBillion, // no change
 				constants.MarketId2: constants.FiveBillion,  // no change
 				constants.MarketId3: constants.FiveBillion,  // no change
+				constants.MarketId4: constants.ThreeBillion, // no change
 			},
 		},
 		"Index price crossing = true (price decrease), old_ticks <= 1, new_ticks <= old_ticks = true": {
@@ -173,6 +179,7 @@ func TestUpdateMarketPrices_Valid(t *testing.T) {
 				constants.MarketId1: constants.ThreeBillion, // no change
 				constants.MarketId2: constants.FiveBillion,  // no change
 				constants.MarketId3: constants.FiveBillion,  // no change
+				constants.MarketId4: constants.ThreeBillion, // no change
 			},
 		},
 	}
@@ -226,6 +233,7 @@ func TestUpdateMarketPrices_SkipNonDeterministicCheck_Valid(t *testing.T) {
 				constants.MarketId1: constants.ThreeBillion, // no change
 				constants.MarketId2: constants.FiveBillion,  // no change
 				constants.MarketId3: constants.FiveBillion,  // no change
+				constants.MarketId4: constants.ThreeBillion, // no change
 			},
 		},
 		"Index price trends in the opposite direction of update price from current price, but still updates state": {
@@ -249,6 +257,7 @@ func TestUpdateMarketPrices_SkipNonDeterministicCheck_Valid(t *testing.T) {
 				constants.MarketId1: constants.ThreeBillion, // no change
 				constants.MarketId2: constants.FiveBillion,  // no change
 				constants.MarketId3: constants.FiveBillion,  // no change
+				constants.MarketId4: constants.ThreeBillion, // no change
 			},
 		},
 		"Index price crossing = true, old_ticks > 1, new_ticks <= sqrt(old_ticks) = false": {
@@ -272,6 +281,7 @@ func TestUpdateMarketPrices_SkipNonDeterministicCheck_Valid(t *testing.T) {
 				constants.MarketId1: constants.ThreeBillion, // no change
 				constants.MarketId2: constants.FiveBillion,  // no change
 				constants.MarketId3: constants.FiveBillion,  // no change
+				constants.MarketId4: constants.ThreeBillion, // no change
 			},
 		},
 		"Index price crossing = true, old_ticks <= 1, new_ticks <= old_ticks = false": {
@@ -295,6 +305,7 @@ func TestUpdateMarketPrices_SkipNonDeterministicCheck_Valid(t *testing.T) {
 				constants.MarketId1: constants.ThreeBillion, // no change
 				constants.MarketId2: constants.FiveBillion,  // no change
 				constants.MarketId3: constants.FiveBillion,  // no change
+				constants.MarketId4: constants.ThreeBillion, // no change
 			},
 		},
 	}
diff --git a/protocol/x/prices/keeper/smoothed_price_test.go b/protocol/x/prices/keeper/smoothed_price_test.go
index a8ce09400e..93237a2c13 100644
--- a/protocol/x/prices/keeper/smoothed_price_test.go
+++ b/protocol/x/prices/keeper/smoothed_price_test.go
@@ -59,6 +59,7 @@ func TestUpdateSmoothedPrices(t *testing.T) {
 				constants.MarketId1: constants.Exchange1_Price1_TimeT.Price + 7,
 				constants.MarketId2: constants.Exchange2_Price2_TimeT.Price + 35,
 				constants.MarketId3: constants.Exchange3_Price3_TimeT.Price,
+				constants.MarketId4: constants.Exchange3_Price3_TimeT.Price,
 				constants.MarketId7: constants.Price1,
 			},
 			linearInterpolateFunc: lib.Uint64LinearInterpolate,
@@ -81,7 +82,8 @@ func TestUpdateSmoothedPrices(t *testing.T) {
 			expectedErr: "Error updating smoothed price for market 0: error while interpolating\n" +
 				"Error updating smoothed price for market 1: error while interpolating\n" +
 				"Error updating smoothed price for market 2: error while interpolating\n" +
-				"Error updating smoothed price for market 3: error while interpolating",
+				"Error updating smoothed price for market 3: error while interpolating\n" +
+				"Error updating smoothed price for market 4: error while interpolating",
 			expectedResult: constants.AtTimeTSingleExchangeSmoothedPricesPlus10, // no change
 		},
 		"Single interpolation error - returns error, continues updating other markets": {
@@ -95,6 +97,7 @@ func TestUpdateSmoothedPrices(t *testing.T) {
 				constants.MarketId1: constants.AtTimeTSingleExchangeSmoothedPricesPlus10[constants.MarketId1], // no change
 				constants.MarketId2: constants.AtTimeTSingleExchangeSmoothedPricesPlus7[constants.MarketId2],  // update
 				constants.MarketId3: constants.AtTimeTSingleExchangeSmoothedPricesPlus10[constants.MarketId3], // update
+				constants.MarketId4: constants.AtTimeTSingleExchangeSmoothedPricesPlus7[constants.MarketId4],  // update
 			}, // no change
 		},
 	}
diff --git a/protocol/x/prices/keeper/update_price_test.go b/protocol/x/prices/keeper/update_price_test.go
index c339289509..6c61b89ec9 100644
--- a/protocol/x/prices/keeper/update_price_test.go
+++ b/protocol/x/prices/keeper/update_price_test.go
@@ -201,6 +201,7 @@ func TestGetValidMarketPriceUpdates(t *testing.T) {
 					types.NewMarketPriceUpdate(constants.MarketId1, constants.Price1+1),
 					types.NewMarketPriceUpdate(constants.MarketId2, constants.Price2),
 					types.NewMarketPriceUpdate(constants.MarketId3, constants.Price3),
+					types.NewMarketPriceUpdate(constants.MarketId4, constants.Price3),
 				},
 			},
 		},
@@ -232,6 +233,7 @@ func TestGetValidMarketPriceUpdates(t *testing.T) {
 					types.NewMarketPriceUpdate(constants.MarketId1, constants.Price1),
 					types.NewMarketPriceUpdate(constants.MarketId2, constants.Price2),
 					types.NewMarketPriceUpdate(constants.MarketId3, constants.Price3),
+					types.NewMarketPriceUpdate(constants.MarketId4, constants.Price3),
 				},
 			},
 		},
@@ -250,6 +252,7 @@ func TestGetValidMarketPriceUpdates(t *testing.T) {
 					types.NewMarketPriceUpdate(constants.MarketId1, constants.Price1),
 					types.NewMarketPriceUpdate(constants.MarketId2, constants.Price2),
 					types.NewMarketPriceUpdate(constants.MarketId3, constants.Price3),
+					types.NewMarketPriceUpdate(constants.MarketId4, constants.Price3),
 				},
 			},
 		},
diff --git a/protocol/x/prices/keeper/validate_market_price_updates_test.go b/protocol/x/prices/keeper/validate_market_price_updates_test.go
index 58e44ef5ff..10b6b92aca 100644
--- a/protocol/x/prices/keeper/validate_market_price_updates_test.go
+++ b/protocol/x/prices/keeper/validate_market_price_updates_test.go
@@ -374,7 +374,7 @@ func TestGetMarketsMissingFromPriceUpdates(t *testing.T) {
 			smoothedIndexPrices: constants.AtTimeTSingleExchangeSmoothedPrices,
 			// The returned market ids must be sorted.
 			expectedMarketIds: []uint32{
-				constants.MarketId0, constants.MarketId1, constants.MarketId2, constants.MarketId3,
+				constants.MarketId0, constants.MarketId1, constants.MarketId2, constants.MarketId3, constants.MarketId4,
 			},
 		},
 		"Non-empty proposed updates, Empty local updates": {
@@ -392,6 +392,7 @@ func TestGetMarketsMissingFromPriceUpdates(t *testing.T) {
 				types.NewMarketPriceUpdate(constants.MarketId0, constants.Price5),
 				types.NewMarketPriceUpdate(constants.MarketId1, constants.Price6),
 				types.NewMarketPriceUpdate(constants.MarketId3, constants.Price7),
+				types.NewMarketPriceUpdate(constants.MarketId4, constants.Price4),
 			},
 			indexPrices:         constants.AtTimeTSingleExchangePriceUpdate,
 			smoothedIndexPrices: constants.AtTimeTSingleExchangeSmoothedPrices,
@@ -404,7 +405,7 @@ func TestGetMarketsMissingFromPriceUpdates(t *testing.T) {
 			indexPrices:         constants.AtTimeTSingleExchangePriceUpdate,
 			smoothedIndexPrices: constants.AtTimeTSingleExchangeSmoothedPrices,
 			// The returned market ids must be sorted.
-			expectedMarketIds: []uint32{constants.MarketId0, constants.MarketId2, constants.MarketId3},
+			expectedMarketIds: []uint32{constants.MarketId0, constants.MarketId2, constants.MarketId3, constants.MarketId4},
 		},
 	}
 	for name, tc := range tests {

From 603f4708b2b3606d411c9c293a717a7a7375176f Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Fri, 8 Mar 2024 17:26:01 -0500
Subject: [PATCH 06/13] Fix daemon tests.

---
 protocol/daemons/liquidation/client/grpc_helper_test.go | 1 +
 1 file changed, 1 insertion(+)

diff --git a/protocol/daemons/liquidation/client/grpc_helper_test.go b/protocol/daemons/liquidation/client/grpc_helper_test.go
index 2d164072ad..1b25ff48b8 100644
--- a/protocol/daemons/liquidation/client/grpc_helper_test.go
+++ b/protocol/daemons/liquidation/client/grpc_helper_test.go
@@ -411,6 +411,7 @@ func TestGetAllMarketPrices(t *testing.T) {
 					MarketPrices: []pricestypes.MarketPrice{
 						constants.TestMarketPrices[2],
 						constants.TestMarketPrices[3],
+						constants.TestMarketPrices[4],
 					},
 				}
 				mck.On("AllMarketPrices", mock.Anything, req2).Return(response2, nil)

From d51033fe799e5ea0de3e46ae92e5211bacaa9ca4 Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Mon, 11 Mar 2024 12:08:19 -0400
Subject: [PATCH 07/13] Fix nits.

---
 protocol/x/subaccounts/keeper/isolated_subaccount.go | 11 ++++++-----
 1 file changed, 6 insertions(+), 5 deletions(-)

diff --git a/protocol/x/subaccounts/keeper/isolated_subaccount.go b/protocol/x/subaccounts/keeper/isolated_subaccount.go
index 3f8000abff..0424934aea 100644
--- a/protocol/x/subaccounts/keeper/isolated_subaccount.go
+++ b/protocol/x/subaccounts/keeper/isolated_subaccount.go
@@ -36,9 +36,7 @@ func (k Keeper) checkIsolatedSubaccountConstraints(
 	}
 
 	for i, u := range settledUpdates {
-		_, exists := idOfSettledUpdates[*u.SettledSubaccount.Id]
-
-		if exists {
+		if _, exists := idOfSettledUpdates[*u.SettledSubaccount.Id]; exists {
 			return false, nil, types.ErrNonUniqueUpdatesSubaccount
 		}
 
@@ -61,7 +59,8 @@ func (k Keeper) checkIsolatedSubaccountConstraints(
 // perpetuals. This function assumes the settled subaccount is valid and does not violate the
 // the constraints.
 // The constraint being checked is:
-//   - a subaccount with a position in an isolated perpetual cannot have updates other perpetuals
+//   - a subaccount with a position in an isolated perpetual cannot have updates for other
+//     perpetuals
 //   - a subaccount with a position in a non-isolated perpetual cannot have updates for isolated
 //     perpetuals
 //   - a subaccount with no positions cannot be updated to have positions in multiple isolated
@@ -90,6 +89,7 @@ func isValidIsolatedPerpetualUpdates(
 		if marketType == perptypes.PerpetualMarketType_PERPETUAL_MARKET_TYPE_ISOLATED {
 			hasIsolatedUpdate = true
 			isolatedUpdatePerpetualId = perpetualUpdate.PerpetualId
+			break
 		}
 	}
 
@@ -109,6 +109,7 @@ func isValidIsolatedPerpetualUpdates(
 		if marketType == perptypes.PerpetualMarketType_PERPETUAL_MARKET_TYPE_ISOLATED {
 			isIsolatedSubaccount = true
 			isolatedPositionPerpetualId = perpetualPosition.PerpetualId
+			break
 		}
 	}
 
@@ -130,7 +131,7 @@ func isValidIsolatedPerpetualUpdates(
 		return types.ViolatesIsolatedSubaccountConstraints, nil
 	}
 
-	// Note  we can assume that if `hasIsolatedUpdate` is true, there is only a single perpetual
+	// Note we can assume that if `hasIsolatedUpdate` is true, there is only a single perpetual
 	// update for the subaccount, given the above check.
 	// A subaccount with a perpetual position in an isolated perpetual cannot have an update to
 	// another isolated perpetual.

From f4a7413c8f731c0b774d6933892d9e4c8babdfec Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Tue, 12 Mar 2024 16:24:21 -0400
Subject: [PATCH 08/13] Update CanUpdateSubaccounts as well.

---
 .../subaccounts/keeper/isolated_subaccount.go |  14 +-
 protocol/x/subaccounts/keeper/subaccount.go   |  32 +++--
 .../x/subaccounts/keeper/subaccount_test.go   | 124 ++++++++++++++++++
 3 files changed, 157 insertions(+), 13 deletions(-)

diff --git a/protocol/x/subaccounts/keeper/isolated_subaccount.go b/protocol/x/subaccounts/keeper/isolated_subaccount.go
index 0424934aea..50798a3805 100644
--- a/protocol/x/subaccounts/keeper/isolated_subaccount.go
+++ b/protocol/x/subaccounts/keeper/isolated_subaccount.go
@@ -1,6 +1,8 @@
 package keeper
 
 import (
+	"math"
+
 	errorsmod "cosmossdk.io/errors"
 	sdk "github.com/cosmos/cosmos-sdk/types"
 	"github.com/dydxprotocol/v4-chain/protocol/lib"
@@ -10,7 +12,6 @@ import (
 
 // checkIsolatedSubaccountConstaints will validate all `updates` to the relevant subaccounts against
 // isolated subaccount constraints.
-// The `updates` have to contain `Subaccounts` with unique `SubaccountIds`.
 // The input subaccounts must be settled.
 //
 // Returns a `success` value of `true` if all updates are valid.
@@ -21,6 +22,7 @@ func (k Keeper) checkIsolatedSubaccountConstraints(
 	ctx sdk.Context,
 	settledUpdates []settledUpdate,
 	perpetuals []perptypes.Perpetual,
+	uniqueSubaccounts bool,
 ) (
 	success bool,
 	successPerUpdate []types.UpdateResult,
@@ -36,8 +38,10 @@ func (k Keeper) checkIsolatedSubaccountConstraints(
 	}
 
 	for i, u := range settledUpdates {
-		if _, exists := idOfSettledUpdates[*u.SettledSubaccount.Id]; exists {
-			return false, nil, types.ErrNonUniqueUpdatesSubaccount
+		if uniqueSubaccounts {
+			if _, exists := idOfSettledUpdates[*u.SettledSubaccount.Id]; exists {
+				return false, nil, types.ErrNonUniqueUpdatesSubaccount
+			}
 		}
 
 		result, err := isValidIsolatedPerpetualUpdates(u, perpIdToMarketType)
@@ -77,7 +81,7 @@ func isValidIsolatedPerpetualUpdates(
 
 	// Check if the updates contain an update to an isolated perpetual.
 	hasIsolatedUpdate := false
-	isolatedUpdatePerpetualId := uint32(0)
+	isolatedUpdatePerpetualId := uint32(math.MaxUint32)
 	for _, perpetualUpdate := range settledUpdate.PerpetualUpdates {
 		marketType, exists := perpIdToMarketType[perpetualUpdate.PerpetualId]
 		if !exists {
@@ -96,7 +100,7 @@ func isValidIsolatedPerpetualUpdates(
 	// Check if the subaccount has a position in an isolated perpetual.
 	// Assumes the subaccount itself does not violate the isolated perpetual constraints.
 	isIsolatedSubaccount := false
-	isolatedPositionPerpetualId := uint32(0)
+	isolatedPositionPerpetualId := uint32(math.MaxUint32)
 	hasPerpetualPositions := len(settledUpdate.SettledSubaccount.PerpetualPositions) > 0
 	for _, perpetualPosition := range settledUpdate.SettledSubaccount.PerpetualPositions {
 		marketType, exists := perpIdToMarketType[perpetualPosition.PerpetualId]
diff --git a/protocol/x/subaccounts/keeper/subaccount.go b/protocol/x/subaccounts/keeper/subaccount.go
index f773d92f33..8df5cb0388 100644
--- a/protocol/x/subaccounts/keeper/subaccount.go
+++ b/protocol/x/subaccounts/keeper/subaccount.go
@@ -280,25 +280,29 @@ func (k Keeper) UpdateSubaccounts(
 		return false, nil, err
 	}
 
+	// Check if the updates satisfy the isolated perpetual constraints.
+	allPerps := k.perpetualsKeeper.GetAllPerpetuals(ctx)
+	success, successPerUpdate, err = k.checkIsolatedSubaccountConstraints(
+		ctx,
+		settledUpdates,
+		allPerps,
+		true, // uniqueSubaccounts
+	)
+	if !success || err != nil {
+		return success, successPerUpdate, err
+	}
+
 	success, successPerUpdate, err = k.internalCanUpdateSubaccounts(ctx, settledUpdates, updateType)
 	if !success || err != nil {
 		return success, successPerUpdate, err
 	}
 
 	// Get a mapping from perpetual Id to current perpetual funding index.
-	allPerps := k.perpetualsKeeper.GetAllPerpetuals(ctx)
 	perpIdToFundingIndex := make(map[uint32]dtypes.SerializableInt)
 	for _, perp := range allPerps {
 		perpIdToFundingIndex[perp.Params.Id] = perp.FundingIndex
 	}
 
-	// Check if the updates satisfy the isolated perpetual constraints.
-	success, successPerUpdate, err = k.checkIsolatedSubaccountConstraints(
-		ctx, settledUpdates, allPerps)
-	if !success || err != nil {
-		return success, successPerUpdate, err
-	}
-
 	// Apply the updates to perpetual positions.
 	UpdatePerpetualPositions(
 		settledUpdates,
@@ -385,6 +389,18 @@ func (k Keeper) CanUpdateSubaccounts(
 		return false, nil, err
 	}
 
+	// Check if the updates satisfy the isolated perpetual constraints.
+	allPerps := k.perpetualsKeeper.GetAllPerpetuals(ctx)
+	success, successPerUpdate, err = k.checkIsolatedSubaccountConstraints(
+		ctx,
+		settledUpdates,
+		allPerps,
+		false, // uniqueSubaccounts
+	)
+	if !success || err != nil {
+		return success, successPerUpdate, err
+	}
+
 	return k.internalCanUpdateSubaccounts(ctx, settledUpdates, updateType)
 }
 
diff --git a/protocol/x/subaccounts/keeper/subaccount_test.go b/protocol/x/subaccounts/keeper/subaccount_test.go
index a963c77aff..49fcaab685 100644
--- a/protocol/x/subaccounts/keeper/subaccount_test.go
+++ b/protocol/x/subaccounts/keeper/subaccount_test.go
@@ -3638,6 +3638,130 @@ func TestCanUpdateSubaccounts(t *testing.T) {
 				},
 			},
 		},
+		"Isolated subaccounts - has update for both an isolated perpetual and non-isolated perpetual": {
+			assetPositions:           testutil.CreateUsdcAssetPosition(big.NewInt(1_000_000_000_000)),
+			expectedSuccess:          false,
+			expectedSuccessPerUpdate: []types.UpdateResult{types.ViolatesIsolatedSubaccountConstraints},
+			perpetuals: []perptypes.Perpetual{
+				constants.BtcUsd_NoMarginRequirement,
+				constants.IsoUsd_IsolatedMarket,
+			},
+			updates: []types.Update{
+				{
+					PerpetualUpdates: []types.PerpetualUpdate{
+						{
+							PerpetualId:      uint32(0),
+							BigQuantumsDelta: big.NewInt(-100_000_000), // -1 BTC
+						},
+						{
+							PerpetualId:      uint32(3),
+							BigQuantumsDelta: big.NewInt(1_000_000_000), // 1 ISO
+						},
+					},
+				},
+			},
+		},
+		"Isolated subaccounts - has update for both 2 isolated perpetuals": {
+			assetPositions:           testutil.CreateUsdcAssetPosition(big.NewInt(1_000_000_000_000)),
+			expectedSuccess:          false,
+			expectedSuccessPerUpdate: []types.UpdateResult{types.ViolatesIsolatedSubaccountConstraints},
+			perpetuals: []perptypes.Perpetual{
+				constants.IsoUsd_IsolatedMarket,
+				constants.Iso2Usd_IsolatedMarket,
+			},
+			updates: []types.Update{
+				{
+					PerpetualUpdates: []types.PerpetualUpdate{
+						{
+							PerpetualId:      uint32(3),
+							BigQuantumsDelta: big.NewInt(-1_000_000_000), // 1 ISO
+						},
+						{
+							PerpetualId:      uint32(4),
+							BigQuantumsDelta: big.NewInt(10_000_000), // 1 ISO2
+						},
+					},
+				},
+			},
+		},
+		"Isolated subaccounts - subaccount with isolated perpetual position has update for non-isolated perpetual": {
+			assetPositions:           testutil.CreateUsdcAssetPosition(big.NewInt(1_000_000_000_000)),
+			expectedSuccess:          false,
+			expectedSuccessPerUpdate: []types.UpdateResult{types.ViolatesIsolatedSubaccountConstraints},
+			perpetuals: []perptypes.Perpetual{
+				constants.BtcUsd_NoMarginRequirement,
+				constants.IsoUsd_IsolatedMarket,
+			},
+			perpetualPositions: []*types.PerpetualPosition{
+				{
+					PerpetualId:  uint32(3),
+					Quantums:     dtypes.NewInt(1_000_000_000), // 1 ISO
+					FundingIndex: dtypes.NewInt(0),
+				},
+			},
+			updates: []types.Update{
+				{
+					PerpetualUpdates: []types.PerpetualUpdate{
+						{
+							PerpetualId:      uint32(0),
+							BigQuantumsDelta: big.NewInt(-100_000_000), // -1 BTC
+						},
+					},
+				},
+			},
+		},
+		"Isolated subaccounts - subaccount with isolated perpetual position has update for another isolated perpetual": {
+			assetPositions:           testutil.CreateUsdcAssetPosition(big.NewInt(1_000_000_000_000)),
+			expectedSuccess:          false,
+			expectedSuccessPerUpdate: []types.UpdateResult{types.ViolatesIsolatedSubaccountConstraints},
+			perpetuals: []perptypes.Perpetual{
+				constants.IsoUsd_IsolatedMarket,
+				constants.Iso2Usd_IsolatedMarket,
+			},
+			perpetualPositions: []*types.PerpetualPosition{
+				{
+					PerpetualId:  uint32(3),
+					Quantums:     dtypes.NewInt(1_000_000_000), // 1 ISO
+					FundingIndex: dtypes.NewInt(0),
+				},
+			},
+			updates: []types.Update{
+				{
+					PerpetualUpdates: []types.PerpetualUpdate{
+						{
+							PerpetualId:      uint32(4),
+							BigQuantumsDelta: big.NewInt(-10_000_000), // -1 ISO2
+						},
+					},
+				},
+			},
+		},
+		"Isolated subaccounts - subaccount with non-isolated perpetual position has update for isolated perpetual": {
+			assetPositions:           testutil.CreateUsdcAssetPosition(big.NewInt(1_000_000_000_000)),
+			expectedSuccess:          false,
+			expectedSuccessPerUpdate: []types.UpdateResult{types.ViolatesIsolatedSubaccountConstraints},
+			perpetuals: []perptypes.Perpetual{
+				constants.BtcUsd_NoMarginRequirement,
+				constants.IsoUsd_IsolatedMarket,
+			},
+			perpetualPositions: []*types.PerpetualPosition{
+				{
+					PerpetualId:  uint32(0),
+					Quantums:     dtypes.NewInt(100_000_000), // 1 BTC
+					FundingIndex: dtypes.NewInt(0),
+				},
+			},
+			updates: []types.Update{
+				{
+					PerpetualUpdates: []types.PerpetualUpdate{
+						{
+							PerpetualId:      uint32(3),
+							BigQuantumsDelta: big.NewInt(-1_000_000_000), // -1 ISO
+						},
+					},
+				},
+			},
+		},
 	}
 
 	for name, tc := range tests {

From 733c4c3024bdb721e71bab5549ffbc7cca714d1b Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Tue, 12 Mar 2024 16:43:46 -0400
Subject: [PATCH 09/13] Fix comment.

---
 .../subaccounts/keeper/isolated_subaccount.go | 11 +-----
 protocol/x/subaccounts/keeper/subaccount.go   | 38 +++++++++----------
 2 files changed, 20 insertions(+), 29 deletions(-)

diff --git a/protocol/x/subaccounts/keeper/isolated_subaccount.go b/protocol/x/subaccounts/keeper/isolated_subaccount.go
index 50798a3805..9dd3006a1c 100644
--- a/protocol/x/subaccounts/keeper/isolated_subaccount.go
+++ b/protocol/x/subaccounts/keeper/isolated_subaccount.go
@@ -12,6 +12,8 @@ import (
 
 // checkIsolatedSubaccountConstaints will validate all `updates` to the relevant subaccounts against
 // isolated subaccount constraints.
+// This function checks each update in isolation, so if multiple updates for the same subaccount id
+// are passed in, they are evaluated together
 // The input subaccounts must be settled.
 //
 // Returns a `success` value of `true` if all updates are valid.
@@ -22,7 +24,6 @@ func (k Keeper) checkIsolatedSubaccountConstraints(
 	ctx sdk.Context,
 	settledUpdates []settledUpdate,
 	perpetuals []perptypes.Perpetual,
-	uniqueSubaccounts bool,
 ) (
 	success bool,
 	successPerUpdate []types.UpdateResult,
@@ -30,7 +31,6 @@ func (k Keeper) checkIsolatedSubaccountConstraints(
 ) {
 	success = true
 	successPerUpdate = make([]types.UpdateResult, len(settledUpdates))
-	var idOfSettledUpdates = make(map[types.SubaccountId]struct{})
 	var perpIdToMarketType = make(map[uint32]perptypes.PerpetualMarketType)
 
 	for _, perpetual := range perpetuals {
@@ -38,12 +38,6 @@ func (k Keeper) checkIsolatedSubaccountConstraints(
 	}
 
 	for i, u := range settledUpdates {
-		if uniqueSubaccounts {
-			if _, exists := idOfSettledUpdates[*u.SettledSubaccount.Id]; exists {
-				return false, nil, types.ErrNonUniqueUpdatesSubaccount
-			}
-		}
-
 		result, err := isValidIsolatedPerpetualUpdates(u, perpIdToMarketType)
 		if err != nil {
 			return false, nil, err
@@ -53,7 +47,6 @@ func (k Keeper) checkIsolatedSubaccountConstraints(
 		}
 
 		successPerUpdate[i] = result
-		idOfSettledUpdates[*u.SettledSubaccount.Id] = struct{}{}
 	}
 
 	return success, successPerUpdate, nil
diff --git a/protocol/x/subaccounts/keeper/subaccount.go b/protocol/x/subaccounts/keeper/subaccount.go
index 8df5cb0388..6a2e56b2c6 100644
--- a/protocol/x/subaccounts/keeper/subaccount.go
+++ b/protocol/x/subaccounts/keeper/subaccount.go
@@ -280,23 +280,17 @@ func (k Keeper) UpdateSubaccounts(
 		return false, nil, err
 	}
 
-	// Check if the updates satisfy the isolated perpetual constraints.
 	allPerps := k.perpetualsKeeper.GetAllPerpetuals(ctx)
-	success, successPerUpdate, err = k.checkIsolatedSubaccountConstraints(
+	success, successPerUpdate, err = k.internalCanUpdateSubaccounts(
 		ctx,
 		settledUpdates,
+		updateType,
 		allPerps,
-		true, // uniqueSubaccounts
 	)
 	if !success || err != nil {
 		return success, successPerUpdate, err
 	}
 
-	success, successPerUpdate, err = k.internalCanUpdateSubaccounts(ctx, settledUpdates, updateType)
-	if !success || err != nil {
-		return success, successPerUpdate, err
-	}
-
 	// Get a mapping from perpetual Id to current perpetual funding index.
 	perpIdToFundingIndex := make(map[uint32]dtypes.SerializableInt)
 	for _, perp := range allPerps {
@@ -389,19 +383,8 @@ func (k Keeper) CanUpdateSubaccounts(
 		return false, nil, err
 	}
 
-	// Check if the updates satisfy the isolated perpetual constraints.
 	allPerps := k.perpetualsKeeper.GetAllPerpetuals(ctx)
-	success, successPerUpdate, err = k.checkIsolatedSubaccountConstraints(
-		ctx,
-		settledUpdates,
-		allPerps,
-		false, // uniqueSubaccounts
-	)
-	if !success || err != nil {
-		return success, successPerUpdate, err
-	}
-
-	return k.internalCanUpdateSubaccounts(ctx, settledUpdates, updateType)
+	return k.internalCanUpdateSubaccounts(ctx, settledUpdates, updateType, allPerps)
 }
 
 // getSettledSubaccount returns 1. a new settled subaccount given an unsettled subaccount,
@@ -534,6 +517,7 @@ func checkPositionUpdatable(
 
 // internalCanUpdateSubaccounts will validate all `updates` to the relevant subaccounts.
 // The `updates` do not have to contain `Subaccounts` with unique `SubaccountIds`.
+// The `updates` do not have to contain `Subaccounts` with unique `SubaccountIds`.
 // Each update is considered in isolation. Thus if two updates are provided
 // with the same `Subaccount`, they are validated without respect to each
 // other.
@@ -547,6 +531,7 @@ func (k Keeper) internalCanUpdateSubaccounts(
 	ctx sdk.Context,
 	settledUpdates []settledUpdate,
 	updateType types.UpdateType,
+	perpetuals []perptypes.Perpetual,
 ) (
 	success bool,
 	successPerUpdate []types.UpdateResult,
@@ -555,6 +540,19 @@ func (k Keeper) internalCanUpdateSubaccounts(
 	success = true
 	successPerUpdate = make([]types.UpdateResult, len(settledUpdates))
 
+	// Check if the updates satisfy the isolated perpetual constraints.
+	success, successPerUpdate, err = k.checkIsolatedSubaccountConstraints(
+		ctx,
+		settledUpdates,
+		perpetuals,
+	)
+	if err != nil {
+		return false, nil, err
+	}
+	if !success {
+		return success, successPerUpdate, nil
+	}
+
 	// Block all withdrawals and transfers if either of the following is true within the last
 	// `WITHDRAWAL_AND_TRANSFERS_BLOCKED_AFTER_NEGATIVE_TNC_SUBACCOUNT_SEEN_BLOCKS`:
 	// - There was a negative TNC subaccount seen.

From 3b5287350140dd8370324e6f0a96a71a46027e16 Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Tue, 12 Mar 2024 16:50:40 -0400
Subject: [PATCH 10/13] Fix lint.

---
 protocol/x/subaccounts/keeper/subaccount.go | 3 ---
 1 file changed, 3 deletions(-)

diff --git a/protocol/x/subaccounts/keeper/subaccount.go b/protocol/x/subaccounts/keeper/subaccount.go
index 6a2e56b2c6..73a90d577a 100644
--- a/protocol/x/subaccounts/keeper/subaccount.go
+++ b/protocol/x/subaccounts/keeper/subaccount.go
@@ -537,9 +537,6 @@ func (k Keeper) internalCanUpdateSubaccounts(
 	successPerUpdate []types.UpdateResult,
 	err error,
 ) {
-	success = true
-	successPerUpdate = make([]types.UpdateResult, len(settledUpdates))
-
 	// Check if the updates satisfy the isolated perpetual constraints.
 	success, successPerUpdate, err = k.checkIsolatedSubaccountConstraints(
 		ctx,

From ea0985bd6bb5dab712afbb7b79abeb0f4cb97aa7 Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Tue, 12 Mar 2024 16:54:47 -0400
Subject: [PATCH 11/13] Add TODO.

---
 protocol/x/subaccounts/keeper/subaccount.go | 2 ++
 1 file changed, 2 insertions(+)

diff --git a/protocol/x/subaccounts/keeper/subaccount.go b/protocol/x/subaccounts/keeper/subaccount.go
index 73a90d577a..a819333cea 100644
--- a/protocol/x/subaccounts/keeper/subaccount.go
+++ b/protocol/x/subaccounts/keeper/subaccount.go
@@ -537,6 +537,8 @@ func (k Keeper) internalCanUpdateSubaccounts(
 	successPerUpdate []types.UpdateResult,
 	err error,
 ) {
+	// TODO(TRA-99): Add integration / E2E tests on order placement / matching with this new
+	// constraint.
 	// Check if the updates satisfy the isolated perpetual constraints.
 	success, successPerUpdate, err = k.checkIsolatedSubaccountConstraints(
 		ctx,

From 124bc3f9b7b33b664c6aadb02b28f7bef1f786a2 Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Wed, 13 Mar 2024 11:28:54 -0400
Subject: [PATCH 12/13] Increase gas limit in E2E test for transfers.

---
 protocol/app/e2e/ante_test.go | 2 +-
 1 file changed, 1 insertion(+), 1 deletion(-)

diff --git a/protocol/app/e2e/ante_test.go b/protocol/app/e2e/ante_test.go
index 3cb7ec9fa7..815952064d 100644
--- a/protocol/app/e2e/ante_test.go
+++ b/protocol/app/e2e/ante_test.go
@@ -137,7 +137,7 @@ func TestParallelAnteHandler_ClobAndOther(t *testing.T) {
 						},
 					},
 					constants.TestFeeCoins_5Cents,
-					100_000,
+					110_000,
 					ctx.ChainID(),
 					[]uint64{account.GetAccountNumber()},
 					[]uint64{sequenceNumber},

From a0ed3da12196b2ecb42c94f76c136b5f5f707783 Mon Sep 17 00:00:00 2001
From: Vincent Chau <99756290+vincentwschau@users.noreply.github.com>
Date: Wed, 13 Mar 2024 12:28:08 -0400
Subject: [PATCH 13/13] Fix comments.

---
 protocol/x/subaccounts/keeper/isolated_subaccount.go | 2 +-
 protocol/x/subaccounts/keeper/subaccount.go          | 1 -
 2 files changed, 1 insertion(+), 2 deletions(-)

diff --git a/protocol/x/subaccounts/keeper/isolated_subaccount.go b/protocol/x/subaccounts/keeper/isolated_subaccount.go
index 9dd3006a1c..e5547d3986 100644
--- a/protocol/x/subaccounts/keeper/isolated_subaccount.go
+++ b/protocol/x/subaccounts/keeper/isolated_subaccount.go
@@ -13,7 +13,7 @@ import (
 // checkIsolatedSubaccountConstaints will validate all `updates` to the relevant subaccounts against
 // isolated subaccount constraints.
 // This function checks each update in isolation, so if multiple updates for the same subaccount id
-// are passed in, they are evaluated together
+// are passed in, they are not evaluated separately.
 // The input subaccounts must be settled.
 //
 // Returns a `success` value of `true` if all updates are valid.
diff --git a/protocol/x/subaccounts/keeper/subaccount.go b/protocol/x/subaccounts/keeper/subaccount.go
index a819333cea..ca9e978e80 100644
--- a/protocol/x/subaccounts/keeper/subaccount.go
+++ b/protocol/x/subaccounts/keeper/subaccount.go
@@ -517,7 +517,6 @@ func checkPositionUpdatable(
 
 // internalCanUpdateSubaccounts will validate all `updates` to the relevant subaccounts.
 // The `updates` do not have to contain `Subaccounts` with unique `SubaccountIds`.
-// The `updates` do not have to contain `Subaccounts` with unique `SubaccountIds`.
 // Each update is considered in isolation. Thus if two updates are provided
 // with the same `Subaccount`, they are validated without respect to each
 // other.