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Asset Security and Risks

Asset security

For enhanced SD Utility Pool asset security, the following measures are undertaken by Stader:

  • Node Operators deposit to be used as collateral: Stader calculate the Health Factor for each node based on a collateral value, which is half of the Node Operator's ETH deposit (e.g., for a node with one validator, we will consider a collateral value of 2 ETH, even though the node operators deposits 4 ETH.)
  • Liquidation Threshold: Additionally, we consider a liquidation threshold of 70%, i.e. the node will be liquidated if the utilization fees exceeds 70% of the collateral value. In case node operators attempt to exit without settling their utilized $SD, a portion of their ETH deposit will be locked until they clear their utilization fees.

External Audit

SD Utility Pool has undergone a comprehensive audit and has been thoroughly evaluated for security and functionality by the highly renowned auditor SigmaPrime. Audit Report

Slashing Risks

In rare instances, ETHx Node Operators utilizing SD from the Utility Pool may face slashing. In this scenario, SD tokens from the pool can be used to offset the losses. However, in such rare cases, the ETH deposited by the node operators will take precedence to cover the slashing penalty, followed by their self-bonded SD collateral. Only after exhausting these options, the Utilized SD collateral will be used to address any remaining deficiencies.