While threats are a major issue that must be acknowledged, as with any failure, there is a lot we can learn for DeFi and Web 3.0 to create a safer and more flexible future.
Is the UST Crash the End of Decentralized Lending? No. If anything, UST's massive success prior to its collapse is key evidence that a sustainable and safe stablecoin and decentralized economy is in great demand and just around the corner. Source Protocol is committed to creating one of the most flexible ecosystems in history, so a flexible, safe, and reliable foundation must pave the way forward.
The first lesson learned from the LUNA attack is that a stable monetary model should never include 100% support for speculative assets. Big mistakes and lack of foresight in LUNA. They feel that the market will feel that LUNA is valuable regardless of any potential scenario or attack, and the algorithm can adjust to any market changes.
Clearly not, despite every underlying technology. It was also a case study showing that all speculative assets, regardless of technology, are vulnerable to mass market sales should a major attack be launched. Thus, it clearly states that a cryptoasset solvency growth model is the only possible way to reduce the impact of market volatility and the probability of success.
This can be done by over-collateralizing assets one-to-one with USD or a more stable currency. This is why solvency growth based on reliable and instant audited asset applicability is a fundamental building block of Source Protocol's stablecoin (SourceUSX) and its entire ecosystem.
Terra is in a very painful position for many ecosystem developers, many of whom have lost years of hard work and sacrifice in a matter of days. They should not ignore the decision to migrate development to a new network. These developers must understand that the ecosystem they choose to build is ensuring the future of their dApps and technologies on a robust and flexible platform from the ground up. (SOURCE) The purpose of providing this.
The TerraLuna blockchain is a blockchain built by CosmosSDK, which has witnessed the significant development of the blockchain dApp and DeFi products built on it. As the client tries to settle his UST and LUNA, the attack on UST will cause a large amount of transaction cargo in a short period of time.
During settlement frenzy, the TerraLuna blockchain is able to continue to operate and settle transactions without failure. This is a case of CryptoKitties that confirms Ethereum waiting for a famous network to be destroyed and clogged from a thriving application. It also further proves that the CosmosSDK is architected and designed to take on such a large volume of buying and selling activities without failing.
It should be noted that all chains built by CosmosSDK can solve the same transaction volume and chain elasticity as TerraLUNA. Although this may be a small part of the data, it has already proved the cargo capacity of the CosmosSDK to build the chain, and confirmed why it is reasonable for Interchain/Cosmos to build the ecosystem SOURCE. More information on SOURCE will be available in the coming months.
Creating Resilience in Source's Stablecoin USX
For stablecoins, just saying this word may give investors a taste of bitterness for a period of time until confidence in reliable stablecoins is restored. The SourceProtocol team is trying to mitigate the multi-billion dollar attack scenario to their own initial stablecoin, SourceUSX (USX), as it has always been a threat scenario that must be considered.
According to specific requirements such as quantity, market value, and liquidity factors on SourceMarketplace, various stable currencies and blue-chip encrypted assets are completely over-collateralized. Each of these properties is successful and secure. Until now, USDC, DAI, BUSD and TUSD have reliable repayment records. The security and clarity of Tether, the most popular stablecoin in the crypto market, is negotiable.
USX can be minted/borrowed only when clients use SourceOneMarket to lock their assets in smart contracts. Similar to Aave and Compound, SourceOneMarket is a point-to-point non-custodial DeFi application that allows users to earn interest without selling these assets, please borrow these assets without selling these assets. The credit limit is announced based on the amount of collateral provided by the customer and the amount of digital currency and the amount of assets deposited.
It is important to note that this line of credit is limited to 40% or less of your collateralized borrowing element, to further avoid any kind of failure due to an attack. That is, based on what they offer to the market, customers can only borrow up to 40% of their credit line USX. Clients are paid daily interest on any amount borrowed by SourceOneMarket until the amount borrowed is repaid. When the borrowed property is repaid, the borrowed tokens are destroyed by the contract, and the customer can obtain the initial collateral.
This is a non-custodial way of minting USX which brings higher security and makes it impossible to attack. SourceOneMarket also provides an additional layer of security for USX as it is supported by a structural analysis of stablecoins and assets, each with its own element of collateralized borrowing. Mortgage borrowing elements are set on each property listed on the market and are controlled by remediation.
Allows the collateralization factor USX of each asset to be over-collateralized and can build a level of trust behind each asset that supports it. According to USDC, more trusted assets will have stronger collateral factors, while less verified or untrusted assets will have lower collateral factors.
If Luna's UST is listed on SourceOneMarket when the LUNA offensive period has come, its mortgage factor can be immediately set to 0. While this may settle overleveraged and overborrowed clients, it will maintain the backing of responsible clients and users of USX.
In theory, all stable coins in the Yuanyi market must be attacked at the same time, lose contact, and USX will be at risk. If this happens, the mortgage factor of these stablecoins will be set to zero, and the collateral factor of the safe property will increase. This will give the customer time and ability to repay his loan prior to any settlement. This is an incredibly immediate, effective and dynamic accountability mechanism unique to USX.
In short, there is support for diversification and layering of USX stable assets, reducing threat levels and increasing security. This design also makes the USX a great hedging tool, as it requires all of the available nukes to happen at the same time in order to get close to destroying or damaging the USX hook. Something like this is unlikely to happen. If something like this happened, the entire $1.5 trillion crypto market would be worthless.
