The contracts were audited by Certik in November 2021. As for the centralization problem, it is solved by the Multi-Signature Controlling Account. There are five Multi-Signature Keyholders, controlled by Avatar, Wanlabs and the team separately. Defrost Finance will further diversify the centralization as the DAO is formed.
All contracts of Defrost Finance cannot be upgraded. The manipulation by the contract manager becomes impossible.
Defrost Finance is maintaining a Reserve Pool, as the insurance for the protocol safety. The H2O assets in the Reserve Pool are collected from the Stability Fees and Liquidation Penalty. In cases when the protocol fails to liquidate the vaults falling below the Minumum Collateral Ratio, or some other scenarios leading to the protocol deficit, the Reserve Pool will take the responsibility as the compensation.
Everyone can monitor the assets in the Reserve Pool anytime. 0x7f08ba62fadaf3b4b70a8ddc22b3c63669bddeb2
Defrost Finance has partnered with Chainlink, the leading decentralized blockchain data provider for bringing off-chain data to smart contracts on Avalanche.
Chainlink is a decentralized oracle network that enables smart contracts to securely access off-chain data feeds, web APIs, and traditional bank payments. It is well known for providing highly secure and reliable oracles.
Defrost Finance is initially choosing LP tokens from well-known Dexes, like Trader Joe and Pangolin, as the collateral for minting H2O. The chosen LP tokens are with deep liquidity and proven preservation of value. The same principle will be applied in deciding the later cross-chain assets as the collateral from other chains.
The MELT holders will take the role to decide the collateral by governance voting.