Oracles
Pricing assets inside Curvance
Last updated
Pricing assets inside Curvance
Last updated
To enhance security, the protocol primarily uses a Dual Oracle system, leveraging data from various sources such as Redstone, Chainsight, Pyth, Chainlink, API3, Chronicle, and more. While most assets utilize two independent oracle sources to ensure accurate pricing and protect against manipulation and volatility, the protocol can support assets with a single oracle when appropriate. For instance, assets like wstETH, which are redeemable for stETH, may not require a second oracle due to their inherent price stability and transparency.
If the price data from both oracles diverges significantly—due to either manipulation or extreme market fluctuations— The Curvance protocol can pause borrowing and redemptions for that asset. Preset parameters trigger this pause, allowing time for Oracle prices to stabilize and converge.
In the event of an abnormal pricing discrepancy between oracle feeds, typically seen during flash loan or oracle attacks, the creation of new debt and redemptions are halted while liquidations are still allowed to be processed.
If an extreme discrepancy is detected, the creation of new debt, redemptions, and liquidations are all halted.
Together, these measures form the protocol's Circuit Breaker System, which safeguards users during market anomalies.
Lender Protection and Price Favorability
To provide additional security for lenders, the dual oracle system uses the most favorable oracle-reported price when calculating the final asset price in user liquidity checks, optimizing protection against bad debt.
Example:
If one oracle reports an asset price of $100 while another reports $101, the collateral value is set at $100 for borrowing calculations, ensuring conservative collateral valuation and protecting borrowers from taking more debt than they should.
If a user risks liquidation and stablecoin oracle prices differ, e.g., $1 and $1.01, the system will evaluate the position at the higher $1.01 price, providing added security for lenders.
