Introduction

Bucket Protocol is a decentralized stablecoin protocol that enables users to maximize the financial efficiency of their crypto assets without incurring unforeseen interest payments. By depositing crypto assets into a smart contract, users create a Collateralized Debt Position (CDP). This allows them to generate liquidity instantly by borrowing $BUCK, a stablecoin pegged to the US dollar.

To ensure the system’s stability, each CDP (or “Bottle”) must maintain a minimum collateral ratio (MCR) of 110%, although this ratio may vary depending on the specific collateral type. At any point, $BUCK holders have the option to exchange their stablecoins for the underlying collateral.

The protocol employs an immediate liquidation mechanism designed to encourage stable deposits and automatically rebalance risk between high-risk and low-risk Bottles. This approach enables Bucket Protocol to maintain a lower collateral requirement than other systems while still preserving overall stability. The system’s robustness is primarily driven by user behavior and the natural incentives for profit, rather than relying on stringent controls or monetary policies.