Refund funder if signer setup fails

solidity/contracts/deposit/Deposit.sol

@@ -255,7 +255,6 @@ contract Deposit is DepositFactoryAuthority {
     //
 
     /// @notice     Anyone may notify the contract that signing group setup has timed out.
-    /// @dev        We rely on the keep system punishes the signers in this case.
     /// @return     True if successful, otherwise revert.
     function notifySignerSetupFailure() public returns (bool) {
         self.notifySignerSetupFailure();

solidity/contracts/deposit/DepositFunding.sol

@@ -65,6 +65,7 @@ library DepositFunding {
         uint256 _bondRequirementSatoshi = _lotSizeSatoshis.mul(_system.getInitialCollateralizedPercent()).div(100);
         uint256 _bondRequirementWei = _d.fetchBitcoinPrice().mul(_bondRequirementSatoshi);
 
+        _d.keepSetupFee = _system.createNewDepositFeeEstimate();
         /* solium-disable-next-line value-in-payable */
         _d.keepAddress = _system.requestNewKeep.value(msg.value)(_m, _n, _bondRequirementWei);
         _d.signerFeeDivisor = _system.getSignerFeeDivisor();
@@ -96,14 +97,21 @@ library DepositFunding {
     }
 
     /// @notice     Anyone may notify the contract that signing group setup has timed out.
-    /// @dev        We rely on the keep system to punish the signers in this case.
     /// @param  _d  Deposit storage pointer.
     function notifySignerSetupFailure(DepositUtils.Deposit storage _d) public {
         require(_d.inAwaitingSignerSetup(), "Not awaiting setup");
         require(
             block.timestamp > _d.signingGroupRequestedAt.add(TBTCConstants.getSigningGroupFormationTimeout()),
             "Signing group formation timeout not yet elapsed"
         );
+
+        // refund the deposit owner the cost to create a new keep at current price levels.
+        uint256 _seized = _d.seizeSignerBonds();
+
+        /* solium-disable-next-line security/no-send */
+        _d.depositOwner().send(_d.keepSetupFee);
+        _d.pushFundsToKeepGroup(_seized.sub(_d.keepSetupFee));
+
         _d.setFailedSetup();
         _d.logSetupFailed();
 

solidity/contracts/deposit/DepositUtils.sol

@@ -36,6 +36,7 @@ library DepositUtils {
         uint128 initialCollateralizedPercent;
         uint128 undercollateralizedThresholdPercent;
         uint128 severelyUndercollateralizedThresholdPercent;
+        uint256 keepSetupFee;
 
         // SET ON FRAUD
         uint256 liquidationInitiated;  // Timestamp of when liquidation starts

solidity/contracts/test/deposit/TestDeposit.sol

@@ -63,6 +63,10 @@ contract TestDeposit is Deposit {
         self.signerFeeDivisor = _signerFeeDivisor;
     }
 
+    function setKeepSetupFee(uint256 _fee) public {
+        self.keepSetupFee = _fee;
+    }
+
     function getSignerFeeDivisor() public view returns (uint256) { return self.signerFeeDivisor; }
 
     function setLotSize(uint256 _lotSizeSatoshis) public {

solidity/test/DepositFundingTest.js

@@ -6,6 +6,7 @@ const {BN, constants, expectRevert} = require("@openzeppelin/test-helpers")
 const {ZERO_ADDRESS} = constants
 const {expect} = require("chai")
 const ECDSAKeepStub = contract.fromArtifact("ECDSAKeepStub")
+const TBTCSystem = contract.fromArtifact("TBTCSystem")
 
 // spare signature:
 // signing with privkey '11' * 32
@@ -50,6 +51,7 @@ describe("DepositFunding", async function() {
   let tbtcDepositToken
   let testDeposit
   let ecdsaKeepStub
+  let ecdsaKeepFactory
 
   let fundingProofTimerStart
   let beneficiary
@@ -66,8 +68,10 @@ describe("DepositFunding", async function() {
       tbtcDepositToken,
       testDeposit,
       ecdsaKeepStub,
+      ecdsaKeepFactoryStub,
     } = await deployAndLinkAll())
 
+    ecdsaKeepFactory = ecdsaKeepFactoryStub
     beneficiary = accounts[4]
     await tbtcDepositToken.forceMint(
       beneficiary,
@@ -172,29 +176,59 @@ describe("DepositFunding", async function() {
       )
     })
   })
-
   describe("notifySignerSetupFailure", async () => {
     let timer
+    let owner
+    let openKeepFee
+    before(async () => {})
 
     before(async () => {
+      ;({
+        tbtcConstants,
+        mockRelay,
+        tbtcSystemStub,
+        tbtcToken,
+        tbtcDepositToken,
+        testDeposit,
+        ecdsaKeepStub,
+      } = await deployAndLinkAll([], {TBTCSystemStub: TBTCSystem}))
+
+      openKeepFee = await ecdsaKeepFactory.openKeepFeeEstimate.call()
+      await testDeposit.setKeepSetupFee(openKeepFee)
+      owner = accounts[1]
+      await tbtcDepositToken.forceMint(
+        owner,
+        web3.utils.toBN(testDeposit.address),
+      )
       timer = await tbtcConstants.getSigningGroupFormationTimeout.call()
     })
 
     beforeEach(async () => {
       const block = await web3.eth.getBlock("latest")
       const blockTimestamp = block.timestamp
+      const value = openKeepFee + 100
+
+      await ecdsaKeepStub.send(value)
+
       fundingProofTimerStart = blockTimestamp - timer.toNumber() - 1
 
       await testDeposit.setState(states.AWAITING_SIGNER_SETUP)
 
       await testDeposit.setFundingProofTimerStart(fundingProofTimerStart)
     })
 
-    it("updates state to setup failed, deconstes state, and logs SetupFailed", async () => {
+    it("updates state to setup failed, deconstes state, logs SetupFailed, and refunds TDT owner", async () => {
+      const initialFunderBalance = await web3.eth.getBalance(owner)
       const blockNumber = await web3.eth.getBlock("latest").number
       await testDeposit.notifySignerSetupFailure()
 
       const signingGroupRequestedAt = await testDeposit.getSigningGroupRequestedAt.call()
+      const finalFunderBalance = await web3.eth.getBalance(owner)
+
+      expect(
+        new BN(finalFunderBalance).sub(new BN(initialFunderBalance)),
+      ).to.eq.BN(openKeepFee)
+
       expect(
         signingGroupRequestedAt,
         "signingGroupRequestedAt should be 0",