Other Special Situations and Details
Depleted Tank Scenario
There are two methods to solve this issue.
1. PTB bot
Everyone can write a bot with the following actions to profit:
Flash mint/loan BUCK.
Deposit in Tank.
Trigger liquidation -> receive discounted collateral.
Sell collateral back to BUCK on DEX.
Repay flash mint/loan.
2. Redistribution
In the case of downward depeg arbitrage involving the Tank, besides bots and adding sufficient margin to ensure profit from liquidations (to some extent, profit is proportional to the efficiency of liquidation), in an extreme scenario where the funds in the tank are depleted, redistribution liquidation is triggered, acting as a last resort, where all participants fairly share the bad debt positions based on their CR, details can be found on page 16 of the whitepaper.
Oracles Risk
Another common source of depeg is the manipulation of oracles (or short-term failures). Besides integrating three independent, high-quality oracles, the Bucket protocol also has a complete mechanism to prevent stale or inaccurate quotes, details of which can be found in the Oracles.
Collateral Liquidity Risk
The essence of price stability lies in managing (collateral) liquidity risk. Bucket Protocol addresses this risk by the following design considerations:
supports a diversity of collaterals to enhance resilience,
supports RWA as collateral to increase income, improving the overall robustness of the protocol.
Each type of collateral has a Debt Ceiling to reduce risk (the depeg of DAI previously was due to excessive risk exposure to USDC).
Generally, CDPs' design allows users' debt positions to be independent of each other, effectively isolating risks and avoiding issues of reserve mismanagement.
Summary
Through well-designed mechanisms, BUCK manages market risk and liquidity risk effectively. Also, due to the decentralized approach of CDPs, compared to other solutions, it inherently avoids counterparty and regulatory risks.
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