Bucket Protocol
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  • Introduction
    • Introduction
    • Key Advantages
  • Bucket Campaign
    • Bucket x Sui Wallet Campaign
  • Mechanisms
    • System Overview
    • Terminology
    • Borrowing
    • BUCK Savings Rate (BSR) and sBUCK
    • Tank and Liquidations
    • Peg Stability Module
    • Redemptions
    • Recovery Mode
    • Flash Loan
    • Protocol Revenue
  • Price Stability & Depeg Analysis
    • Scenarios of Upward Depeg
    • Scenarios of Downward Depeg
    • Other Special Situations and Details
  • Outro
    • Oracles
    • Security
    • FAQ
    • Contracts
    • Links
  • External Audits & Analysis
    • Introduction
    • Smart Contract Audit
    • Formal Verification
    • Market Risk Assessment
    • Terms of Service
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  1. Mechanisms

Flash Loan

PreviousRecovery ModeNextProtocol Revenue

Last updated 5 months ago

The Bucket Protocol consists of two main pools: the Bucket and the Tank. The Bucket collects user-deposited collateral, and the Tank houses BUCK from contributors. Arbitrageurs can take flash loans from these pools for profit.

For instance, if BUCK's price drops 5% below its peg on a decentralized exchange (DEX), a user can borrow SUI from the SUI Bucket, buy discounted BUCK on the DEX, and redeem the BUCK for SUI to repay the original SUI loan, gaining extra SUI. This is possible because of the protocol's oracle-based redemption ratio. This flash loan can be processed in one transaction, negating the need for user collateral.

Flash Loan to Get $SUI for buying cheaper $BUCK on DEX → Redeem $BUCK for $SUI