Safety Rules and Regulations for Ensuring Platform Integrity
Protocol Safety Measures are a critical aspect of our protocol. We have implemented robust mechanisms to ensure the safety and stability of our platform. This includes the Emergency Termination Procedure and the Circuit Breaker.
The Minimum Collateral mechanism is a crucial safeguard designed to ensure that every position on our platform is sufficiently backed by collateral. This practice minimizes the risk of financial loss, both to the individual trader and the broader market, especially in volatile market conditions. By stipulating a minimum collateral requirement, we create a buffer against adverse market fluctuations, ensuring that positions remain solvent and the system resilient.
Mark to Market is a standard accounting practice adopted at Secured Finance, which entails recording the fair value of assets and liabilities, thereby providing a realistic appraisal of the financial health and the risk profile of positions on our platform. This practice is indispensable for maintaining transparency and accuracy in financial reporting, which in turn fosters trust and confidence among our users. The Mark to Market mechanism also plays a pivotal role in ensuring that the pricing of assets is aligned with the current market conditions, which is vital for effective risk management.
The Circuit Breaker is a protective mechanism used in the bond market to prevent excessive price movements and maintain stability. It is an automatic mechanism that temporarily suspends trading if there is a sudden and significant price movement. The Circuit Breaker is triggered when the price of bonds rises or falls beyond a certain pre-determined limit.
Emergency termination is a crucial functionality designed to address unforeseen situations that could compromise the integrity of our protocol. This includes scenarios such as hacks or unexpected bugs. When this functionality is executed, all markets are immediately halted, and the protocol becomes non-operational. Users can then only redeem their positions and withdraw their tokens.