Halting mechanism
Last updated
Last updated
To protect liquidity providers, if any of the stablecoins in WingRiders Stableswap or ADA/stablecoin pools fail (as a project, as tech, or have currency problems), resulting in de-pegging of the coin, all swapping within these pools on WingRiders is automatically halted to safeguard the portion of the other asset locked in that pool for its owners.
It is set that in the case of a 15% de-pegging of a stablecoin (e.g. for iUSD if the price is not between 0.85 and 1.15 USD), the halting mechanism automatically occurs on the transaction execution level (batcher). The withdrawal of Liquidity will always remain available.
Our batcher always tries to apply transactions to the pools from oldest to newest until they expire. If it detects de-pegged stablecoin in Stableswap or ADA/stablecoin pools, it will skip swap and add liquidity transactions until the price recovers or the transaction expires. Prices of stablecoins are fetched using external API providers every 15 minutes. Users will be notified about this in the UI by having warning notifications next to their pending transactions and in the modals in the swap and adding liquidity. They can choose to reclaim their transactions.
The de-pegging mechanism differs between Stableswap pools and ADA/stablecoin pools. Since the Stableswap pool model works great if the two tokens are roughly the same value, we halt trading and add liquidity if we detect a 15% difference in their price from external API. This means if for some reason both tokens de-pegg from their original value by the same margin (e.g. DJED would be 0.81 USD and iUSD would be 0.83 USD), we still process transactions as usual. However, the same de-pegg would halt transactions on the ADA pools of respective tokens (e.g. ADA/DJED, ADA/iUSD).
