Introducing the eBTC Protocol Purple Paper
Read the full Purple Paper
TL;DR
- Use Lido stETH to borrow eBTC
- Pay 0% interest, repayment & initiation fees
- 110% minimum collateralization ratio
- Immutable smart contract based w/minimized governance
Fee-less Borrowing
Borrowing eBTC is done without any upfront fees or interest on the principal or debt. The protocol earns revenue by taking a percentage of accrued staking yield from the total system collateral.
This percentage is called the Protocol Yield Share (PYS).
Liquidations
A mechanism for ensuring the solvency of the system. If the ICR of a CDP falls below the MCR of 110% the CDP is open for liquidation. The outstanding debt can be repaid by any market participant in exchange for some surplus collateral & the Gas Stipend as an incentive.
Debt Redistribution
In the case that a CDP is not liquidated until after its ICR goes below 103%, the system allows for the depletion of its collateral to properly incentivize the liquidation operation at the cost of leaving some uncollateralized debt behind.
Minimized Governance
eBTC aims to be the most trustless and censorship-resistant synthetic Bitcoin in DeFi. To address potential economic security risks, a minimized governance mechanism has been introduced to eBTC to ensure resilience.
This governance system was carefully designed to ensure a non-custodial and censorship-resistant protocol while enabling some flexibility around the margins to adapt to market & technical developments. Governance can modify parameters surrounding fee competitiveness, peg stability, risk management, economic and technical security of the system.
Oracles
The architecture of eBTC depends on a primary and unchangeable Oracle, as well as a controlled backup Oracle that will only come into play automatically in the rare event that the primary Oracle becomes unresponsive.
It relies on Chainlink as its primary Oracle Provider & aggregates the following price feeds;
- ETH/BTC (0.5%, 1hr)
- stETH/ETH (0.5%, 24hr)
