This scenario verifies that the cyan "container" element scrolls properly with squashing enabled.

CASE 1, original layer tree:
{
  "bounds": [785, 4050],
  "children": [
    {
      "bounds": [785, 4050],
      "contentsOpaque": true,
      "drawsContent": true,
      "children": [
        {
          "bounds": [400, 200],
          "contentsOpaque": true,
          "drawsContent": true,
          "backfaceVisibility": "hidden",
          "backgroundColor": "#0000FF",
          "children": [
            {
              "shouldFlattenTransform": false,
              "children": [
                {
                  "bounds": [50, 50],
                  "contentsOpaque": true,
                  "drawsContent": true,
                  "backfaceVisibility": "hidden",
                  "backgroundColor": "#FF0000"
                },
                {
                  "position": [100, 50],
                  "bounds": [200, 4000],
                  "drawsContent": true
                }
              ]
            }
          ]
        }
      ]
    }
  ]
}
CASE 2, scrolling y to 80, the "container" element should remain positioned with respect to the scrolled document, the fixed-pos layer compensates for the new scroll position:
{
  "bounds": [785, 4050],
  "children": [
    {
      "bounds": [785, 4050],
      "contentsOpaque": true,
      "drawsContent": true,
      "children": [
        {
          "position": [0, 80],
          "bounds": [400, 200],
          "contentsOpaque": true,
          "drawsContent": true,
          "backfaceVisibility": "hidden",
          "backgroundColor": "#0000FF",
          "children": [
            {
              "shouldFlattenTransform": false,
              "children": [
                {
                  "bounds": [50, 50],
                  "contentsOpaque": true,
                  "drawsContent": true,
                  "backfaceVisibility": "hidden",
                  "backgroundColor": "#FF0000"
                },
                {
                  "position": [100, -30],
                  "bounds": [200, 4000],
                  "drawsContent": true
                }
              ]
            }
          ]
        }
      ]
    }
  ]
}