Find below the safety measures the Pods team explored to contain risks during the early stages of the protocol.
There are many risks associated with DeFi protocols and, with Pods Protocol, it is no different. Users must be aware of them when using any decentralized application and never allocate funds they are unwilling to lose completely.
Pods will launch the protocol on mainnet in phases. These different phases are an attempt to increase users' safety and limit the community's losses in a bug, hack or exploit's situation. Safety measures allow for an interactive launch of a full-featured product with limited liquidity.
Currently, the measures include the existence and control of admin keys and caps.
Caps are defined (and can be changed throughout the option's lifetime) to control the maximum amount of options tokens minted and the maximum amount of stablecoins added as liquidity to the Options AMM. We plan to gradually increase the cap limit as the code proves itself economically and systematically stable.
The Pods Team currently holds admin keys on the protocol with a multi-sig wallet. We intend to burn the admin keys as the code proves itself economically and systematically stable.
We explain in detail what are the current powers of the keys the team holds below.
The admin is capable of:
Increasing / Decreasing Cap
The Option Instrument has a cap for the number of options (tokenA) users can mint on each live option series. Simultaneously, the Options AMM has a cap for the number of stablecoins (tokenB) that can be added as liquidity to the pool. The admin controller can decide the size of the cap at any time during the option's life.
Change contract addresses of the peripherals contracts
Our core contract OptionAMMPool is supplied with data from other sources. For example, spot price feeds Black Scholes to calculate the premium and the next sigma.
Pricing Method, Oracles, and Implied Volatility contracts can be swapped if there's a future iteration with improvements.
The admin can change the address of those contracts, but not the logic of the OptionAMMPool itself.
Addresses are kept by the ConfigurationManager contract, which itself is secured by a multi-sig wallet.
The Emergency Stop power describes the ability to pause and resume all the OptionAMMPool contract operations (add liquidity, trade, or remove liquidity).
Increase or decrease the Implied Volatility provided to the calculation of the Weighted Average IV
Holding this power allows us to work around problems like Implied Volatility manipulation on the AMM.