Security Measures

Maximum Loss Mechanism

IBNSCTrade's innovative approach to safeguarding assets includes the Maximum Loss mechanism. This feature scrutinizes the price of a yield token in relation to its underlying asset. When the yield token's price drops below the predetermined maximum loss threshold, typically ranging from 0.01% to 0.25%, certain operations associated with the yield token are temporarily suspended. These operations include liquidation, deposits (both direct and underlying), and yield harvesting.

In such scenarios, users retain the ability to withdraw the yield token (e.g., yDAI) but cannot directly access the underlying collateral (e.g., DAI). This protective measure is crucial in maintaining the integrity and stability of the IBNSCTrade ecosystem.

Repay Cap and Liquidate Cap

To address potential market volatilities and prevent significant arbitrage opportunities, particularly in the event of a de-pegging of a collateral asset, IBNSCTrade implements both Repay and Liquidate Caps. These caps are designed as temporal restrictions:

• Repay Cap: This cap limits the amount of debt that can be repaid within a specific time frame. For example, a Repay Cap might be set to allow repayment of "10k ETH every 10 minutes."

• Liquidate Cap: Similarly, this cap restricts the volume of an asset that can be liquidated over a designated period. An example would be "10k ETH can be liquidated every 10 minutes."

It's important to note that these caps are primarily applied to stablecoin collaterals, given their design to maintain a stable peg to the USD. For standalone, floating price assets like ETH, such caps are not necessary due to the nature of their market dynamics.

Proactive Damage Control

While the security measures in place, such as the Maximum Loss mechanism and the Repay and Liquidate Caps, cannot entirely eliminate the risks associated with a stablecoin losing its peg or value depreciation, they play a crucial role in preserving the value and backing of the IBNSCTrade synthetic tokens. These measures are part of IBNSCTrade's commitment to ensuring a safe and resilient platform for its users, minimizing potential risks while maintaining operational flexibility.