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Safety Module
as of 01/25/2023
DeFI is an emerging technology with several potential risks, so a safety module is implemented to protect the protocol against those risks.
The main role of the Safety Module is to safeguard the protocol against unexpected loss of funds. The Safety Module acts as a mitigation mechanism designed to absorb the impact of any unfortunate shortfall event on the protocol. It serves as an insurance module and adds an additional security layer to the protocol.
Users can deposit their EGLD, sEGLD, BUSD, USDT, USDC, UTK, and HTM and earn safety incentives in the form of the HTM token that is purchased with a portion of the ecosystem's revenue. A percentage of the funds deposited in the safety module may be utilized to offset the losses sustained in an unfortunate occurrence.
The Safety Module acts as a security layer to the protocol. In case of an unfortunate shortfall event, a percentage of the staked liquidity can be used to cover the deficit.
Several factors, including the risks associated with smart contracts, liquidations, and oracle failure, might result in an unpredicted loss of funds in DeFI protocols.
The Safety Module will initially have a pending cooldown set at 30 days, which can be changed through governance.