Nuon v2 Whitepaper
  • Abstract
  • Introduction
  • Challenge
  • Architecture
    • Overview
    • Treasury
    • Deposit Conversion
    • Refilling Buffer
    • Vaults
    • Dutch Auction
    • Cross-chain Deposits
    • Governance
    • Emergency Mode
    • Minting Caps Equilibrium
    • Backstops
  • Governance
    • Veto System
    • Proposal System
    • Vote Power Weighting
  • NUON
    • Overview
    • Rebasing
    • Staking
  • MaxCap
    • Overview
    • Token Allocation
    • Staking Distribution
    • Claiming Excess
  • Miscellaneous
    • Security Audit
    • System Transition
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  1. Architecture

Emergency Mode

When the protocol reaches a critical state of having no buffer, it is at risk of approaching undercollateralization and being unable to process redemptions. If the collateral ratio is less than 100% (time averaged over 1 week, 3 days and 24 hours) then Emergency Mode is activated. To remedy this, the protocol goes into a status in which all vaults are liquidated for USDC which is done via a Dutch auction process. During this process minting and redeeming is disabled. Once all USDC has been acquired from winding down the vaults, NUON is redeemable at a pro rata value.

Individual vaults can also be closed if the vault is underperforming. This is determined as the vault having <90% value compared to the amount of USDC input into the vault. The vault must also have a return that is less than the average return rate for all vaults. If both conditions are met, then the vault begins a wind down with its assets being sold for USDC in a Dutch auction and placed into the buffer.

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Last updated 10 months ago