Asset whitelisting

Protects

• Asset quality

• Collateral stability

Asset whitelisting

To protect borrowed funds from default, DeltaPrime launches with a restricted number of assets with borrowing power. Before integration, we make sure that every token with borrowing power is:

1. Liquid

2. Stable

3. Protected from DEX price manipulation

Liquid

Tokens with borrowing power on DeltaPrime have at least one million dollars worth of liquidity at the time of integration.

As exploits on liquidity protocols tend to happen through the manipulation of DEX prices, having enough liquidity in the integrated DEX is an important layer of defense. Inflating the price of a token with one million dollars is significantly harder, than inflating a token with one hundred dollars.

Additionally having a liquid token protects borrowers and liquidators from slippage. AMMs are based on supply and demand. Whenever you swap a token, you increase the supply of that token, while simultaneously decreasing the demand. Because this influences the price during your swap, you end up with fewer tokens than you might have expected: Slippage. The impact your trade has on the supply/demand ratio is based on how big of a swap you are making, compared to the liquidity in the pool. In doing so, swapping liquid tokens as opposed to illiquid tokens, leads to better capital efficiency for you as a borrower, and for liquidators redeeming their liquidation bonus.

Risks of low-liquidity tokens can be mitigated by customizing their borrowing power or global exposure cap.

Stable

Tokens with borrowing power on DeltaPrime have not had any price changes over 5% within a 30-second period in the last 365 days or during important market up- and downturns.

Multiple liquidation bots, set up by DeltaPrime and active community members, protect borrowed value from being lost through liquidations. In order to timely liquidate these positions, it is important that the assets acting as collateral don't have a history of price spikes. For tokens with 5x borrowing power, liquidation is always profitable as long as prices change within a 16.66% margin within a 30-second interval. The 5% maximum historical price change is set to ensure enough price stability for liquidation bots to execute on time, even if a token becomes three times as volatile as during its worst moments. For sake of comparison: Would UST be integrated with 5x leverage during the 2022 depeg, liquidation bots would have successfully liquidated all positions.

If despite these strict measures a token's price spikes over 16.66%, DeltaPrime's liquidation bots will liquidate immediately, even if at a loss.

Protected from DEX price manipulation

Tokens with borrowing power on DeltaPrime are not price-dependent on the exchanges integrated into DeltaPrime.

While liquidity in the DEX is an important layer of defense against price manipulation, the introduction of flash loans (and whales existing) in web3 allows users to move large sums of money in and out of DEXs. Because of this, prices of tokens integrated into DeltaPrime are not solely dependent on their AMMs. Instead, for an asset to be integrated into DeltaPrime, it needs additional fair price-protection measures.

This means using multiple oracle price data sources from RedStone, or ensuring that at least one of the data sources for the price comes from a centralized exchange. Should the AMM price differ more than 3% (excluding slippage) from the oracle price, the action is reverted.