Summary

Grant Core Team power to ensure disaster recovery and business continuity in case of protocol emergencies.

Rationale

As demonstrated in previous instances, a prompt response is crucial to safeguard Liqwid assets. In a situation akin to the events of the 10th of January, 2024, a decision to halt the markets must be made within 5 to 15 minutes to minimize risk exposure and control potential damage.

Until better and more automated oracle and control mechanisms are in place, Liqwid will rely on human intervention as a last resort. The only other alternative would be that Liqwid built its own oracle/price data feeds and controls based on on-chain data. As this solution is not feasible in the short term, the ability to halt trading in specific market conditions to ensure stability and fairness is essential.

To this regard, implementing a standardized process, known as the "kill switch" to halt the batching of Liqwid markets proves to be the most effective solution available to us.

In our view, the “Kill switch” process works as such:

• It's activated by 1 single person from a small group of people within the Core Team.
• It leaves behind an audit trail (time, date, name of person who flipped the switch).
• Can stop all markets (In the future we'd ideally like to stop selected markets).
• Every activation and/or deactivation of the kill switch triggers some alert sent to the team (deactivation means resuming batching, allowing users to resume normal usage of the protocol).
• Furthermore, this process will be well-documented, known to the Liqwid Core team, easily accessible to different individuals, and carries a low risk of errors during operation.

Conclusion

Business continuity and swift disaster recovery are paramount to the Liqwid Core team. Therefore, the ability to activate the kill switch, which halts market batching and soon after prevents the validation of transactions with incorrect prices on the blockchain, is imperative.

It is noteworthy that the Core team also possesses the “Pause Guardian” multi-sig, capable of instantly halting the protocol with the agreement of four signatories. In contrast, the kill switch can be triggered by a single individual and is readily accessible, akin to a fire extinguisher.

The Core Team recommends the adoption of this proposal and the implementation of the "kill switch", which will allow for rapid response to any and all protocol emergencies that might occur in the future.

Relevant links

• Governance temperature check