MOET Stability and Risk Management
This document analyzes MOET's stability mechanisms, risk factors, and the safety measures that protect its $1 peg within the FCM ecosystem.
Current Implementation Status
Mock Token Status
The current MOET implementation is explicitly a "mock version for testing purposes" and lacks active stability mechanisms. This analysis describes the intended design for production deployment and identifies gaps in the current implementation.
Missing in Current Implementation:
- Active MOET/USD price oracle monitoring
- Algorithmic supply adjustments based on peg deviation
- Reserve fund for redemptions
- Governance controls for economic parameters
- Emergency circuit breakers for extreme scenarios
Present in Current Implementation:
- Over-collateralization requirements
- Liquidation mechanisms
- Interest rate adjustments via utilization
- Mint-and-burn supply model
Stability Mechanisms
Over-Collateralization
The primary stability mechanism is requiring all MOET debt to be backed by excess collateral.
Collateralization Requirements:
_11Standard Position:_11├── Collateral Factor (CF): 0.8 (80% of value usable)_11├── Target Health Factor (HF): 1.3_11├── Required Collateral: CF × HF = 0.8 × 1.3 = 1.04_11└── Collateralization Ratio: 1 / 0.8 × 1.3 = 162.5%_11_11For Every 1 MOET Borrowed:_11├── Effective Collateral Required: $1.30_11├── Total Collateral Required: $1.625_11├── Safety Buffer: $0.625 (38.5%)_11└── Price Drop Tolerance: 38.5% before liquidation threshold
Collateralization by Asset:
| Collateral | CF | Target HF | Min Collateralization | Liquidation Buffer |
|---|---|---|---|---|
| FLOW | 0.8 | 1.3 | 162.5% | 38.5% price drop |
| stFLOW | 0.85 | 1.3 | 152.9% | 34.6% price drop |
| USDC | 0.9 | 1.3 | 144.4% | 30.8% price drop |
| wBTC | 0.75 | 1.3 | 173.3% | 42.3% price drop |
| wETH | 0.75 | 1.3 | 173.3% | 42.3% price drop |
Why Over-Collateralization Provides Stability:
- Redemption Backing: Every MOET can theoretically be redeemed for >$1 worth of collateral
- Liquidation Buffer: Provides time for liquidators to act before insolvency
- Market Confidence: Users trust MOET is backed by real, valuable assets
- Arbitrage Floor: If MOET < $1, arbitrageurs can profit by buying MOET to repay debt and unlock collateral
Liquidation System
Liquidations maintain system solvency by clearing bad debt before positions become insolvent.
Liquidation Threshold:
_13Position Becomes Liquidatable When:_13Health Factor < 1.0_13_13Where:_13HF = (Σ CollateralValue × CollateralFactor) / TotalDebt_13_13Example Liquidatable Position:_13├── Collateral: 1000 FLOW @ $0.60 = $600_13├── Collateral Factor: 0.8_13├── Effective Collateral: $600 × 0.8 = $480_13├── Debt: 615.38 MOET_13├── Health Factor: $480 / $615.38 = 0.78 < 1.0 ⚠️_13└── Status: Liquidatable
Liquidation Process:
_29Step 1: Detection_29├── Keeper bots monitor: All position health factors_29├── Alert triggers: HF < 1.0_29├── Keeper prepares: MOET for liquidation_29└── Submits: Liquidation transaction_29_29Step 2: Collateral Seizure Calculation_29├── Formula: CollateralSeized = (DebtRepaid × (1 + Bonus)) / PriceCollateral_29├── Example: (200 MOET × 1.05) / $0.60 = 350 FLOW_29├── Liquidator profit: 5% (from bonus)_29└── Incentive: Encourages fast liquidation_29_29Step 3: Debt Repayment_29├── Liquidator provides: 200 MOET_29├── Position debt reduced: 615.38 → 415.38 MOET_29├── MOET burned: 200 tokens_29└── Supply reduced: Improves system collateralization_29_29Step 4: Collateral Transfer_29├── Seized collateral: 350 FLOW_29├── Transferred to: Liquidator_29├── Remaining collateral: 650 FLOW_29└── Position still exists: Can be liquidated further if HF still < 1.0_29_29System Impact:_29├── Bad debt cleared: Before insolvency_29├── Supply reduced: Burned MOET improves backing ratio_29├── Liquidator profit: Creates MOET demand (need MOET to liquidate)_29└── Peg support: MOET needed for profitable liquidations
Partial Liquidation:
_13Current Implementation:_13├── Liquidators can repay: Any amount of debt_13├── Goal: Restore HF to healthy level (typically 1.05)_13├── Avoids: Complete position closure_13└── Benefits: User keeps remaining collateral, lower gas costs_13_13Example Partial Liquidation:_13├── Initial: 1000 FLOW, 615.38 MOET debt, HF = 0.78_13├── Liquidator repays: 200 MOET (not full debt)_13├── New state: 650 FLOW, 415.38 MOET debt_13├── New HF: (650 × $0.60 × 0.8) / 415.38 = 0.75_13├── Still liquidatable: Additional liquidations needed_13└── Continues: Until HF restored above 1.0
Interest Rate-Based Stability
Utilization-driven interest rates create economic incentives that stabilize supply and demand.
Rate Mechanism:
_11High Utilization → High Rates → Incentives:_11├── Borrow Side: Expensive MOET discourages new borrowing_11├── Repay Side: High cost incentivizes debt repayment_11├── Supply Side: High yields attract MOET deposits_11└── Result: Utilization decreases toward optimal_11_11Low Utilization → Low Rates → Incentives:_11├── Borrow Side: Cheap MOET encourages new borrowing_11├── Repay Side: Low cost reduces urgency to repay_11├── Supply Side: Low yields discourage new deposits_11└── Result: Utilization increases toward optimal
Example Stabilization Cycle:
_29Phase 1: High Demand_29├── Utilization: 92%_29├── Interest Rate: 45% APY_29├── MOET Price: $1.03 (high demand, premium)_29├── Borrower Response: "Too expensive, I'll repay early"_29├── Lender Response: "Great returns, I'll deposit more"_29└── Effect: Supply ↑, Demand ↓, Utilization → 85%_29_29Phase 2: Market Adjustment_29├── Utilization: 85%_29├── Interest Rate: 18% APY (dropped)_29├── MOET Price: $1.00 (normalized)_29├── Market: Balanced state_29└── Stable: Rates and price_29_29Phase 3: Low Demand_29├── Utilization: 65%_29├── Interest Rate: 7% APY_29├── MOET Price: $0.98 (low demand, slight discount)_29├── Borrower Response: "Cheap money, I'll borrow more"_29├── Lender Response: "Low returns, I'll withdraw"_29└── Effect: Supply ↓, Demand ↑, Utilization → 75%_29_29Phase 4: Equilibrium_29├── Utilization: 75%_29├── Interest Rate: 9% APY_29├── MOET Price: $1.00_29├── Market: Optimal balance_29└── Stable: Long-term equilibrium
Arbitrage Mechanisms
Price deviations from $1 create profitable arbitrage opportunities that naturally restore the peg.
MOET Trading Above $1 (e.g., $1.05):
_30Arbitrage Strategy:_30Step 1: Borrow MOET_30├── Deposit: $1,625 FLOW collateral_30├── Borrow: 1,000 MOET (valued at $1,000 on-protocol)_30├── Cost: Interest on 1,000 MOET debt_30└── Capital: 1,000 MOET in hand_30_30Step 2: Sell MOET on Market_30├── Market price: $1.05_30├── Sell: 1,000 MOET for $1,050_30├── Profit captured: $50 immediate_30└── Hold: $1,050 stablecoins_30_30Step 3: Wait for Peg Restoration_30├── MOET price: Returns to $1.00_30├── Or: Hold position and earn on $1,050_30└── Later repay: 1,000 MOET debt_30_30Step 4: Close Position_30├── Buy back: 1,000 MOET at $1.00 = $1,000_30├── Repay debt: 1,000 MOET to ALP_30├── Withdraw: $1,625 FLOW collateral_30├── Net profit: $1,050 - $1,000 - interest ≈ $45_30└── Market impact: Selling pressure pushed MOET → $1.00_30_30Arbitrageur Incentive:_30├── Risk-free profit: When MOET > $1_30├── Increased supply: More MOET on market (from borrowing)_30├── Selling pressure: Drives price down_30└── Peg restored: MOET returns to $1
MOET Trading Below $1 (e.g., $0.95):
_31Arbitrage Strategy:_31Step 1: Buy Discounted MOET_31├── Market price: $0.95_31├── Buy: 1,000 MOET for $950_31├── Savings: $50 vs. $1 peg_31└── Capital: 1,000 MOET in hand_31_31Step 2: Repay Existing Debt_31├── Existing position: 1,000 MOET debt (valued at $1,000 on-protocol)_31├── Repay using: 1,000 MOET purchased for $950_31├── Debt cleared: 1,000 MOET_31└── Savings realized: $50_31_31Step 3: Unlock Collateral_31├── Debt: Fully repaid_31├── Health Factor: Infinite (no debt)_31├── Withdraw: All collateral_31└── Collateral freed: Can be used elsewhere_31_31Alternative Strategy (Profitable Liquidations):_31├── Buy: 1,000 MOET for $950_31├── Liquidate: Underwater positions_31├── Receive: Collateral worth $1,050 (5% bonus)_31├── Net profit: $1,050 - $950 = $100_31└── Market impact: Buying pressure pushed MOET → $1.00_31_31Arbitrageur Incentive:_31├── Discounted debt repayment: When MOET < $1_31├── Profitable liquidations: Higher margins_31├── Buying pressure: Drives price up_31└── Peg restored: MOET returns to $1
Risk Factors and Mitigation
Depeg Risk
Risk: MOET trades significantly away from $1, breaking user confidence.
Causes:
_17Supply-Side Shock:_17├── Sudden collateral price crash_17├── Mass liquidations → large MOET sell pressure_17├── Liquidators dump MOET on market_17└── Price spirals: MOET → $0.80_17_17Demand-Side Shock:_17├── Loss of confidence in protocol_17├── Users rush to repay debt_17├── High MOET demand → price spike_17└── Price spikes: MOET → $1.20_17_17Oracle Failure:_17├── Oracle reports incorrect prices_17├── Wrong collateral valuations_17├── Inappropriate liquidations or minting_17└── System destabilization
Mitigation Strategies:
_12Current (Implicit):_12├── Over-collateralization: Provides 38-42% buffer_12├── Gradual liquidations: Prevents sudden supply shocks_12├── Interest rate adjustments: Incentivize balance_12└── Arbitrage: Profit-seeking restores peg_12_12Needed for Production:_12├── MOET/USD Price Feed: Active monitoring_12├── Circuit Breakers: Pause minting/borrowing during extreme volatility_12├── Reserve Fund: Protocol-owned MOET/collateral to stabilize price_12├── Stability Module: Direct MOET ↔ $1 redemptions (like DAI PSM)_12└── Gradual Rollout: Caps on total supply during early phase
Example Depeg Scenario:
_33Day 1: Flash Crash_33├── FLOW price: $1.00 → $0.50 (-50%)_33├── System debt: 10M MOET_33├── Liquidations triggered: 3M MOET worth_33├── Liquidators acquire: 3M MOET_33├── Liquidators sell: On DEXs for stablecoins_33├── MOET price: $1.00 → $0.92 (-8%)_33└── Fear spreads: Users panic_33_33Day 2: Panic Selling_33├── Users sell: MOET positions on DEXs_33├── More liquidations: Triggered by volatility_33├── MOET price: $0.92 → $0.85 (-15% total)_33├── System still solvent: Collateral > debt_33└── But: Market price ≠ redemption value_33_33Recovery Mechanism (Without Direct Intervention):_33├── Arbitrageurs notice: MOET at $0.85, redeemable for $1 of collateral_33├── Arbitrage: Buy MOET at $0.85, repay debt, profit $0.15 per MOET_33├── Buying pressure: Increases demand_33├── Liquidations stabilize: Collateral prices bottom out_33├── Days 3-7: MOET gradually recovers to $0.95_33├── Days 8-14: Returns to $1.00_33└── Lesson: Protocol remained solvent, market recovered naturally_33_33Recovery Mechanism (With Direct Intervention):_33├── Protocol Reserve: Buys 500K MOET at $0.85 = $425K spent_33├── Immediate support: Prevents further decline_33├── Confidence restored: Users see protocol actively defending peg_33├── Days 2-3: MOET returns to $0.98_33├── Days 4-5: Stabilizes at $1.00_33├── Protocol profits: Sells 500K MOET at $1.00 = $500K (earned $75K)_33└── Reserves replenished: Ready for next crisis
Cascading Liquidation Risk
Risk: One liquidation triggers more liquidations in a downward spiral.
Mechanism:
_24Step 1: Initial Liquidation_24├── FLOW drops: $1.00 → $0.70 (-30%)_24├── 1,000 positions: Become liquidatable_24├── Liquidations begin: Keepers repay debt, seize collateral_24└── MOET burned: 5M tokens_24_24Step 2: Collateral Dumping_24├── Liquidators sell: Seized collateral (1,000 FLOW each)_24├── Market impact: Large FLOW sell pressure_24├── FLOW price drops further: $0.70 → $0.60 (-14% more)_24└── More positions: Become liquidatable_24_24Step 3: Cascade_24├── Round 2 liquidations: Another 2,000 positions_24├── More collateral dumped: FLOW → $0.50_24├── Round 3 liquidations: 5,000 positions_24├── Panic selling: Amplifies decline_24└── System stress: Extreme_24_24Step 4: Potential Insolvency_24├── If cascade continues: Collateral value < debt value_24├── Protocol becomes insolvent: Cannot back all MOET_24├── MOET depeg: Severe loss of confidence_24└── Crisis: System failure
Mitigation:
_12Current Measures:_12├── High Collateralization: 162.5% provides buffer_12├── Liquidation Bonus: 5% (not too high to encourage mass liquidations)_12├── Partial Liquidations: Don't force full position closure_12└── Interest Rates: Increase during high utilization to slow borrowing_12_12Needed Enhancements:_12├── Liquidation Rate Limits: Max X positions per hour_12├── Progressive Liquidation Bonus: Decreases as more liquidations occur_12├── Emergency Collateral Injection: Protocol buys collateral to support prices_12├── Liquidation Pauses: Temporary halt during extreme volatility_12└── Insurance Fund: Protocol-owned reserves to cover insolvency
Oracle Risk
Risk: Incorrect price data leads to wrong liquidations or improper minting.
Failure Modes:
_20Price Manipulation:_20├── Attacker manipulates: DEX price feed_20├── Oracle reports: False price spike (FLOW = $10)_20├── Users borrow: Excessive MOET based on inflated collateral_20├── Price returns: FLOW = $1, positions insolvent_20└── Protocol loss: Uncollateralized MOET in circulation_20_20Oracle Downtime:_20├── Oracle stops updating: Stale prices_20├── Actual price drops: FLOW $1 → $0.50_20├── Oracle still reports: $1.00 (stale)_20├── No liquidations triggered: Positions become insolvent_20└── System risk: Delayed liquidations, bad debt accumulation_20_20Price Lag:_20├── High volatility: FLOW swings $0.80 → $1.20 → $0.70_20├── Oracle updates: Every 10 minutes (lagging)_20├── Liquidations: Triggered on stale data_20├── User loss: Liquidated unfairly_20└── Protocol reputation: Damaged
Mitigation:
_12Current Protections:_12├── Multiple Oracle Sources: IncrementFi, Band, Pyth_12├── Price Staleness Checks: Reject outdated prices_12└── Price Deviation Guards: Flag abnormal movements_12_12Needed Enhancements:_12├── Median Price Aggregation: Use median of 3+ oracles_12├── Time-Weighted Average Price (TWAP): Smooth out volatility_12├── Circuit Breakers: Pause protocol on extreme deviation_12├── Keeper Slashing: Penalize keepers for using manipulated prices_12├── Price Confidence Intervals: Only accept high-confidence oracle data_12└── Fallback Oracles: Backup sources if primary fails
Example Oracle Attack Prevention:
_16Normal Operation:_16├── Oracle 1 (IncrementFi): FLOW = $1.00_16├── Oracle 2 (Band): FLOW = $1.01_16├── Oracle 3 (Pyth): FLOW = $0.99_16├── Median: $1.00_16└── Use: $1.00 for calculations_16_16Attack Attempt:_16├── Attacker manipulates: Oracle 1 → $10.00 (flash loan attack on DEX)_16├── Oracle 2 (Band): FLOW = $1.01 (not manipulated)_16├── Oracle 3 (Pyth): FLOW = $0.99 (not manipulated)_16├── Median: $1.01 (attack filtered out)_16├── Deviation check: $10 vs $1.01 = 890% deviation ⚠️_16├── System response: Reject Oracle 1, use only 2 & 3_16├── Fallback price: Median($1.01, $0.99) = $1.00_16└── Attack failed: No improper minting occurred
Smart Contract Risk
Risk: Bugs or exploits in MOET, ALP, or FYV contracts lead to loss of funds.
Threat Vectors:
_21Reentrancy Attacks:_21├── Attacker calls: Withdraw function_21├── During execution: Calls back into contract_21├── Exploit: Withdraws funds multiple times_21└── Result: Drained reserves_21_21Overflow/Underflow:_21├── Large numbers: Exceed max uint limits_21├── Wrap around: 2^256 - 1 + 1 = 0_21├── Exploit: Create debt/collateral from nothing_21└── Result: Unlimited MOET minting_21_21Access Control Bugs:_21├── Missing modifiers: Anyone can call admin functions_21├── Exploit: Unauthorized minting_21└── Result: Infinite MOET supply_21_21Logic Errors:_21├── Incorrect formulas: Health factor calculated wrong_21├── Exploit: Borrow more than allowed_21└── Result: Undercollateralized positions
Mitigation:
_13Current Safeguards:_13├── Cadence Language: Resource-oriented, prevents many common bugs_13├── Flow Blockchain: Built-in safety features_13└── Standard Interfaces: FungibleToken standard compliance_13_13Needed for Production:_13├── Multiple Audits: At least 2-3 independent security audits_13├── Bug Bounty Program: Pay white-hats to find vulnerabilities_13├── Formal Verification: Mathematical proof of correctness_13├── Gradual Rollout: Limited supply caps during testing_13├── Emergency Pause: Admin can halt contracts in crisis_13├── Timelocks: Delay on admin actions for community review_13└── Insurance: Protocol coverage (e.g., Nexus Mutual)
Centralization Risk
Risk: Single admin controls minting, creating censorship or manipulation risk.
Current State:
_10Centralized Control:_10├── Minter Resource: Single resource at admin account_10├── Can mint: Unlimited MOET_10├── No oversight: No multi-sig or timelock_10└── Single point of failure: Admin key compromise = total control
Mitigation Roadmap:
_17Phase 1: Multi-Sig (Immediate)_17├── Minter Resource: Controlled by 3-of-5 multi-sig_17├── Requires: Multiple team members to approve minting_17├── Reduces: Single point of failure_17└── Timeline: Before mainnet launch_17_17Phase 2: DAO Governance (6-12 months)_17├── Minting Proposals: Community votes on supply changes_17├── Timelock: 48-hour delay on parameter changes_17├── Veto Power: Community can reject bad proposals_17└── Transparency: All actions on-chain and public_17_17Phase 3: Full Decentralization (12-24 months)_17├── Algorithmic Minting: Based on predefined rules only_17├── No Admin Keys: Smart contracts fully autonomous_17├── Emergency Council: Limited powers, only for critical bugs_17└── Community Control: All parameters governed by token holders
Liquidity Risk
Risk: Insufficient MOET liquidity on DEXs leads to high slippage and price instability.
Problem:
_13Low Liquidity Scenario:_13├── DEX Pool: 100,000 MOET / 100,000 USDC_13├── User wants to swap: 10,000 MOET (10% of pool)_13├── Slippage: ~5% (constant product formula)_13├── Received: 9,500 USDC instead of 10,000_13└── Price impact: MOET effectively worth $0.95_13_13Cascading Effect:_13├── Low liquidity → High slippage_13├── High slippage → Arbitrage inefficient_13├── Inefficient arbitrage → Peg deviates more_13├── Peg deviation → Loss of confidence_13└── Confidence loss → More selling → Lower liquidity
Solution:
_16Protocol-Owned Liquidity (POL):_16├── Protocol deposits: 1M MOET + 1M USDC into DEX_16├── Deep liquidity: Reduces slippage_16├── Permanent: Protocol doesn't remove liquidity_16└── Stability: Enables efficient arbitrage_16_16Liquidity Mining Incentives:_16├── Reward LPs: With protocol tokens_16├── Attract: Third-party liquidity providers_16├── Increase depth: More liquidity = better peg stability_16└── Gradual reduction: As protocol matures_16_16Example Impact:_16├── Before: 100K pool, 10K swap = 5% slippage_16├── After: 5M pool (with POL), 10K swap = 0.1% slippage_16└── Arbitrage: Becomes profitable at ±0.2% deviation vs. ±2% before
Safety Measures Summary
Current Protections
| Mechanism | Description | Effectiveness |
|---|---|---|
| Over-Collateralization | 162.5% backing required | Strong - provides 38-42% safety buffer |
| Liquidation System | Clears bad debt at HF < 1.0 | Moderate - depends on keeper efficiency |
| Interest Rates | Utilization-based incentives | Moderate - self-balancing over time |
| Mint-Burn Model | Supply tied to debt | Strong - prevents uncollateralized supply |
| Partial Liquidations | Avoids full position closure | Strong - reduces cascade risk |
| Multi-Oracle Support | Multiple price sources | Moderate - needs median aggregation |
Required for Production
| Enhancement | Purpose | Priority |
|---|---|---|
| MOET/USD Oracle | Monitor peg deviation | Critical |
| Reserve Fund | Direct peg support | Critical |
| Circuit Breakers | Pause during crisis | High |
| Multi-Sig Minting | Decentralize control | Critical |
| Liquidation Limits | Prevent cascades | High |
| Insurance Fund | Cover insolvency | High |
| Security Audits | Find vulnerabilities | Critical |
| Protocol-Owned Liquidity | Ensure DEX depth | Medium |
| DAO Governance | Community control | Medium |
Risk Assessment Matrix
Likelihood vs. Impact
_19Critical Risk (Address Immediately):_19├── Smart Contract Bug: Medium likelihood, Extreme impact_19├── Oracle Manipulation: Low likelihood, Extreme impact_19└── Admin Key Compromise: Low likelihood, Extreme impact_19_19High Risk (Address Before Mainnet):_19├── Cascading Liquidations: Medium likelihood, High impact_19├── Depeg During Volatility: High likelihood, Medium impact_19└── Liquidity Crisis: Medium likelihood, High impact_19_19Medium Risk (Monitor and Improve):_19├── Interest Rate Inefficiency: Low likelihood, Medium impact_19├── User Error: High likelihood, Low impact_19└── Temporary Oracle Lag: Medium likelihood, Low impact_19_19Low Risk (Acceptable):_19├── Minor Slippage: High likelihood, Very low impact_19├── Network Congestion: Medium likelihood, Low impact_19└── UI/UX Issues: High likelihood, Very low impact
Risk Tolerance Recommendations
For Analysts:
_17Conservative View:_17├── Current MOET: Not suitable for large-scale production_17├── Missing: Critical stability mechanisms_17├── Recommendation: Wait for production-ready version_17└── Risk: High for early adopters_17_17Moderate View:_17├── Testnet MOET: Good for experimentation_17├── Limited mainnet: Acceptable with caps (<$10M TVL)_17├── Recommendation: Start small, scale gradually_17└── Risk: Acceptable with proper risk management_17_17Aggressive View:_17├── Launch MOET: With current design_17├── Iterate fast: Fix issues as they arise_17├── Recommendation: Move fast, learn from mistakes_17└── Risk: High, but manageable with monitoring
Next Steps for Production Readiness
Phase 1: Critical Infrastructure (Pre-Mainnet)
_191. Implement MOET/USD Oracle_19├── Deploy: Chainlink or similar price feed_19├── Monitor: Real-time peg tracking_19└── Alert: Deviations > ±2%_19_192. Add Multi-Sig Minting_19├── Deploy: 3-of-5 multi-sig contract_19├── Transfer: Minter resource to multi-sig_19└── Test: Minting process with multiple signers_19_193. Create Reserve Fund_19├── Allocate: 10% of initial supply_19├── Management: Protocol-controlled_19└── Use: Peg stabilization operations_19_194. Security Audit_19├── Hire: 2-3 reputable audit firms_19├── Scope: MOET, ALP, FYV contracts_19└── Fix: All critical and high-severity findings
Phase 2: Enhanced Stability (0-3 Months Post-Launch)
_191. Deploy Circuit Breakers_19├── Implement: Auto-pause on extreme volatility_19├── Thresholds: ±20% collateral price moves_19└── Recovery: Manual restart after review_19_192. Liquidation Rate Limits_19├── Implement: Max liquidations per block_19├── Progressive bonuses: Decrease during mass liquidations_19└── Monitoring: Alert on high liquidation volume_19_193. Protocol-Owned Liquidity_19├── Deploy: 1M MOET + 1M USDC to DEX_19├── Monitor: Slippage and arbitrage efficiency_19└── Adjust: Add more if needed_19_194. Expand Oracle Coverage_19├── Add: Pyth and additional sources_19├── Implement: Median price aggregation_19└── TWAP: Time-weighted averaging
Phase 3: Decentralization (6-12 Months)
_191. DAO Governance Launch_19├── Deploy: Governance token_19├── Distribute: To users and stakeholders_19└── Proposals: Parameter changes via voting_19_192. Algorithmic Minting Rules_19├── Codify: Minting conditions in smart contract_19├── Remove: Arbitrary admin minting_19└── Governance: Only way to change rules_19_193. Emergency Council_19├── Form: 5-7 member security council_19├── Powers: Limited to emergency pause only_19└── Oversight: Community can remove members_19_194. Full Transparency_19├── Dashboard: Real-time protocol metrics_19├── Analytics: Historical data and trends_19└── Audits: Ongoing bug bounty program
Conclusion
MOET's stability relies on a multi-layered approach combining over-collateralization, liquidations, interest rate adjustments, and arbitrage incentives. While the current mock implementation lacks active stabilization mechanisms, the intended design provides substantial safety margins through:
- 162.5% collateralization creating a significant buffer against volatility
- Liquidation systems clearing bad debt before insolvency
- Economic incentives through interest rates and arbitrage opportunities
- Automated capital flows via FYV yield providing position protection
For production deployment, critical enhancements are needed including MOET/USD oracles, reserve funds, multi-sig controls, and comprehensive audits. With these measures in place, MOET can serve as a stable, capital-efficient synthetic stablecoin powering the FCM ecosystem.
Key Takeaway for Analysts: MOET's stability is fundamentally sound in design but requires additional infrastructure before large-scale production use. The over-collateralization model provides strong backing, but active monitoring and intervention capabilities are essential for maintaining the peg during extreme market conditions.
Additional Resources
- Core Concepts: Fundamental MOET mechanics
- Tokenomics: Supply dynamics and economic models
- System Integration: How MOET connects FCM components
- FCM Math: Mathematical foundations of stability calculations
- ALP Liquidations: Detailed liquidation mechanics