Safeguards
Last updated
Last updated
DGEL’s stability is fortified by a dual-layered safeguard system, exemplifying Trident Network’s commitment to providing users with a steadfast and dependable digital currency. These dual safeguards – Auctions and Automatic Liquidations – work in tandem to maintain the integrity and value of DGEL, ensuring that it remains pegged to the Georgian Lari (GEL) even in the face of extreme market volatility.
Decentralized Auctions
DGEL's first line of defense is its , which acts as a proactive solution to stabilize DGEL’s value. When the Collateralization Ratio falls below the predetermined threshold, indicating a potential risk to DGEL’s stability, the auction mechanism is initiated. Open to all community participants, these auctions enable the competitive bidding for collateralized assets using DGEL. The highest bid, represented in DGEL, determines the winning bid. The DGEL received from the winning bidder is then employed to repurchase DGEL tokens from the market, effectively reducing the DGEL supply. By curbing the supply of DGEL, the system restores balance, ensuring that DGEL remains fully collateralized and maintaining the stability of the stablecoin.
Automatic Liquidations as Fail-Safe:
In situations where auctions might not suffice, or if the market price of underlying assets experiences a sudden and significant drop, DGEL's second safeguard comes into play – . This fail-safe mechanism acts swiftly and decisively to liquidate a portion of the collateralized assets, preventing under-collateralization and safeguarding DGEL’s peg to GEL. By converting the collateralized assets into DGEL tokens and repurchasing DGEL from the market, the system counteracts any excess liquidity, ensuring that the Collateralization Ratio is restored to its optimal level. Automatic liquidations act as the final layer of protection, guaranteeing the stability of DGEL even in the most challenging market conditions.
This dual safeguard approach, comprising decentralized auctions and automatic liquidations, reflects Trident Network’s dedication to user confidence and financial security. By employing these robust mechanisms, Trident Network ensures that DGEL remains a reliable and unyielding digital currency, empowering users with the assurance of stability in an ever-changing crypto landscape. Whether through competitive auctions or swift automatic interventions, Trident Network stands resolute, delivering on its promise of a stable, secure, and trustworthy DGEL for all its users.