From 7686d16cb74bba21acf451ced447ad4a65aff8ae Mon Sep 17 00:00:00 2001
From: Gregory Tsipenyuk <gtsipenyuk@ripple.com>
Date: Thu, 25 Jun 2026 11:12:24 -0400
Subject: [PATCH] Fix MPT transfer fee on small escrow

---
 include/xrpl/ledger/helpers/EscrowHelpers.h | 24 ++++++--
 src/test/app/EscrowToken_test.cpp           | 68 +++++++++++++++++++++
 2 files changed, 88 insertions(+), 4 deletions(-)

diff --git a/include/xrpl/ledger/helpers/EscrowHelpers.h b/include/xrpl/ledger/helpers/EscrowHelpers.h
index bdb83230eb..31e55b92b9 100644
--- a/include/xrpl/ledger/helpers/EscrowHelpers.h
+++ b/include/xrpl/ledger/helpers/EscrowHelpers.h
@@ -1,6 +1,7 @@
 #pragma once
 
 #include <xrpl/basics/Log.h>
+#include <xrpl/beast/utility/instrumentation.h>
 #include <xrpl/ledger/ApplyView.h>
 #include <xrpl/ledger/View.h>
 #include <xrpl/ledger/helpers/AccountRootHelpers.h>
@@ -213,10 +214,25 @@ escrowUnlockApplyHelper<MPTIssue>(
     auto finalAmt = amount;
     if ((!senderIssuer && !receiverIssuer) && lockedRate != kParityRate)
     {
-        // compute transfer fee, if any
-        auto const xferFee = amount.value() - divideRound(amount, lockedRate, amount.asset(), true);
-        // compute balance to transfer
-        finalAmt = amount.value() - xferFee;
+        if (view.rules().enabled(featureMPTokensV2))
+        {
+            XRPL_ASSERT(
+                lockedRate >= kParityRate,
+                "xrpl::escrowUnlockApplyHelper<MPTIssue> : lockedRate is at least parity");
+            // MPTs are integral, so round the delivered amount down and
+            // charge any fractional transfer fee to the escrowed amount.
+            auto const delivered =
+                mulRatio(amount.mpt(), kParityRate.value, lockedRate.value, false);
+            finalAmt = STAmount(amount.asset(), delivered.value());
+        }
+        else
+        {
+            // compute transfer fee, if any
+            auto const xferFee =
+                amount.value() - divideRound(amount, lockedRate, amount.asset(), true);
+            // compute balance to transfer
+            finalAmt = amount.value() - xferFee;
+        }
     }
     return unlockEscrowMPT(
         view,
diff --git a/src/test/app/EscrowToken_test.cpp b/src/test/app/EscrowToken_test.cpp
index 5bb1303dba..9384fdc6b7 100644
--- a/src/test/app/EscrowToken_test.cpp
+++ b/src/test/app/EscrowToken_test.cpp
@@ -3679,6 +3679,72 @@ struct EscrowToken_test : public beast::unit_test::Suite
         }
     }
 
+    void
+    testMPTSplitEscrowTransferFee(FeatureBitset features)
+    {
+        using namespace test::jtx;
+        using namespace std::literals;
+
+        bool const withMPTokensV2 = features[featureMPTokensV2];
+        testcase(
+            std::string("MPT Split Escrow Transfer Fee ") +
+            (withMPTokensV2 ? "with MPTokensV2" : "without MPTokensV2"));
+
+        Env env{*this, features};
+        auto const baseFee = env.current()->fees().base;
+        auto const alice = Account("alice");
+        auto const bob = Account("bob");
+        auto const gw = Account("gw");
+        env.fund(XRP(1'000), alice, bob, gw);
+        env.close();
+
+        MPTTester const mpt({
+            .env = env,
+            .issuer = gw,
+            .holders = {alice, bob},
+            .transferFee = 1'000,
+            .flags = tfMPTCanEscrow | tfMPTCanTransfer,
+        });
+        env(pay(gw, alice, mpt(10'000)));
+        env.close();
+
+        static constexpr int escrowCount = 10;
+        static constexpr int splitAmount = 10;
+        static constexpr int totalLocked = escrowCount * splitAmount;
+        std::array<std::uint32_t, escrowCount> seqs{};
+        for (auto& seq : seqs)
+        {
+            seq = env.seq(alice);
+            env(escrow::create(alice, bob, mpt(splitAmount)),
+                escrow::kCondition(escrow::kCb1),
+                escrow::kFinishTime(env.now() + 1s),
+                Fee(baseFee * 150));
+            env.close();
+        }
+
+        BEAST_EXPECT(env.balance(alice, mpt) == mpt(10'000 - totalLocked));
+        BEAST_EXPECT(env.balance(bob, mpt) == mpt(0));
+        BEAST_EXPECT(env.balance(gw, mpt) == mpt(-10'000));
+        BEAST_EXPECT(mptEscrowed(env, alice, mpt) == totalLocked);
+        BEAST_EXPECT(issuerMPTEscrowed(env, mpt) == totalLocked);
+
+        for (auto const seq : seqs)
+        {
+            env(escrow::finish(bob, alice, seq),
+                escrow::kCondition(escrow::kCb1),
+                escrow::kFulfillment(escrow::kFb1),
+                Fee(baseFee * 150));
+            env.close();
+        }
+
+        auto const feeBurned = withMPTokensV2 ? escrowCount : 0;
+        BEAST_EXPECT(env.balance(alice, mpt) == mpt(10'000 - totalLocked));
+        BEAST_EXPECT(env.balance(bob, mpt) == mpt(totalLocked - feeBurned));
+        BEAST_EXPECT(env.balance(gw, mpt) == mpt(-10'000 + feeBurned));
+        BEAST_EXPECT(mptEscrowed(env, alice, mpt) == 0);
+        BEAST_EXPECT(issuerMPTEscrowed(env, mpt) == 0);
+    }
+
     void
     testMPTRequireAuth(FeatureBitset features)
     {
@@ -3997,6 +4063,8 @@ public:
             testMPTWithFeats(feats);
             testMPTWithFeats(feats - fixTokenEscrowV1);
         }
+        testMPTSplitEscrowTransferFee(all - featureMPTokensV2);
+        testMPTSplitEscrowTransferFee(all);
     }
 };