Risk Management

Besides an emergency governance vote to freeze additional UNIT borrowing (in the event that an unlimited-minting bug or exploit is discovered, for example), governance decisions only affect newly created vaults. For example, if the vault liquidation threshold is altered, that only affects new vaults (or new incremental borrowing from existing vaults). All vaults are subject to the terms of the mCRS’s which instantiated them, not the current mCRS’s.

The DUCAT token will be the token of governance account for the following types of votes:

1. Modify vault borrow collateralisation threshold: Change the minimum collateralisation level at which a user can mint additional UNIT from their vault (currently 160%)

2. Modify vault liquidation threshold: Change the minimum collateralisation level at which a user’s vault faces liquidation (currently 135%).

3. Modify Borrow Fee: change the up-front borrow fee (currently 1%).

4. Modify Liquidation Tax: change the tax assessed on liquidated vaults’ assets (currently 15%).

5. Allocate governance emissions: send DUCAT from the Foundation wallet to specific wallets for specific governance-agreed priorities, e.g., conducting an airdrop to users who satisfied X criteria.

6. Designate BTC Price Oracles: Designate the source of truth for BTC’s most current market price.

7. Designate Backup Oracles: Change oracles to some pre-agreed alternative oracle, in the event of loss of trust in the original oracle’s output.

8. Add or Remove Guardian(s): Add or remove validators to the guardian network.

9. Freeze Borrowing: Immediately halt all new issuance of UNIT, e.g., if a potential borrow exploit were discovered which needed to be patched.

   1. This particular order would have to be implemented to go through extremely quickly once a 51% quorum were reached, as opposed to the normal multi-day voting period.