Methodology

How is Fluid Protocol different from algorithmic stablecoins?

Fluid Protocol is designed to be over-collateralized, meaning there should be more collateral in the protocol than outstanding debt. Fluid Protocol uses battle tested market incentives to achieve this.

What measures are in place to protect Fluid Protocol from black swan events/flash crash?

The system is designed to withstand significant price volatility in underlying collateral. The first line of defense is the stability pool, and the last line of defense is redistribution of collateral amongst Troves.

Price Oracles

Fluid Protocol requires real-time information about the market price of the collateral assets in order to know when to trigger Liquidations. Oracle price feed problems or irrational market dynamics that cause variations in the price of the collateral type for an extended period of time can occur. Thus far, Fluid has integrated Pyth's Oracle price feeds. Please refer to Pyth's docs for more information.

Smart Contract Infrastructure

One of the prominent risks to Fluid Protocol is a bad actor, who discovers a vulnerability in the deployed smart contracts, and then uses it to break the Protocol or steal from it.

In the worst-case scenario, all decentralized digital assets held as collateral in the Protocol are stolen, and recovery of these assets is impossible.

We take security seriously: Smart contracts will be audited by security organizations in the blockchain industry. These security measures provide a strong defense system.

Increased Adoption and Market

A cryptocurrency with price stability serves as an important medium of exchange for many decentralized applications. As such, the potential market for USDF is expansive.

The following is a list of current and future markets for USDF:

• Working capital, hedging,​ ​and collateralized leverage

• Merchant​ ​receipts,​ ​cross-border​ ​transactions,​ ​and​ ​remittances

• Charities and NGOs

• Gaming

• Prediction​ ​markets