Limits and safeguards
Hard limits written into the contracts, a ceiling on oUSD, a speed limit on prices and a pause that can only ever stop new borrowing.
#Rules that can't change
OMEGA's contracts can't be changed once they're live. Fixes and improvements ship as a new version that users choose to move to; nobody can alter the version you're using.
Some settings can be adjusted through governance, but only within hard limits written into the contracts, and only after a public notice period. A setting outside its limits is refused on-chain.
| Setting | At launch | Hard limits |
|---|---|---|
| Borrowing limit (loan level) | 40% | 30% to 60% |
| Liquidation level | 70% | 60% to 85% |
| Liquidation bonus (at 70%, doubling by 90%) | 5% | 2% to 15% |
| Borrow fee | 6% a year | 1% to 15% |
| Smallest loan | $100 | $50 to $1,000 |
| Peg module fee | 0.1% | 0% to 1% |
| Peg module cap | 30% of the ceiling | at most 50% |
No setting can change a loan's current 90-day term.
#The ceiling
The total oUSD that loans can create is capped: $100,000 at launch, raised steadily as the stability pool grows. Each increase can at most double it (or take it to $1 million from below), with 48 hours' notice. Lowering it is always allowed, straight away.
The ceiling is held as room in ten separate allowance slots. New oUSD can only be borrowed by using up room in a slot, so even a fault in the loan contracts could create at most the room left, never more.
#The speed limit
Borrowing and withdrawing ADA are refused when the price has moved more than 20% from any record in the last two hours. See Prices and oracles.
#The pause
A watchdog key can pause new borrowing, and do nothing else: it can't unpause, change a setting or move funds. Only governance can unpause.
The pause can never block repaying, adding ADA, closing a loan, liquidations, stability pool deposits and withdrawals, staking or swapping oUSD out of the peg module.
#Emergency shutdown
In a true emergency, governance can shut down new borrowing and swaps into the peg module for good. Everything else carries on, so every loan can still be repaid and closed. Shutdown can only ever be triggered by a governance decision: no code, condition or single person can trip it.
#Changes you can see coming
Every change to settings is announced on-chain with a start time, and can't apply before it:
| Change | Notice |
|---|---|
| Lowering the ceiling | None |
| The borrow fee, raising the ceiling, most other settings | 48 hours |
| Price sources, approved stake pools, revenue shares, the smallest loan, lowering the liquidation level, raising the bonus | 7 days |
| Adding or reopening a loan product | 30 days |
While a change is announced, every transaction must sit wholly before or wholly after its start, so nobody can pick whichever settings suit them.