The $CMST token is the stablecoin of the Comdex network, employed on the Harbor Protocol with a dollar peg of 1 $CMST to 1 USD. By locking up the stablecoin in vaults secured with collateral assets, liquidations are made possible in the Harbor Protocol.
The Harbor Protocol is a decentralized app powered by smart contracts in the Comdex blockchain, enabling the collateralization of secured digital commodities in vaults for the locking-up and minting of $CMSTs.
Smart contracts such as Cosmos SDK and the CosmWasm mechanism speed up the passive accrual of rewards whenever the stablecoin is being minted.
Harbor is also home to the StableMint feature, in which users of the protocol can make use of the system of arbitraging and make sure the peg is kept stable in external markets.
The collateral assets used as debt, to mint $CMST, are interchain, meaning they are available across blockchains.
According to the Comdex network, they include, among others:
Every type of collateral asset has its own minimum collateralization ratio, utilized to keep the peg and stabilize the liquidity of such assets. When uncertainty about the future value of these assets reaches its peak, it is possible for the assets to subsequently lose value.
This will make the value of the minimum collateralization ratio drop lower than mandated. To avoid future losses, the assets are liquidized via auctions, to keep the liquidity of $CMST afloat.
This is the process of providing liquidity on a blockchain, via tokens.
Liquidations are carried out via blockchain auctions, which include collateral and debt auctions. These may sound the same but have different approaches. Let’s look them up:
Done through a dutch auction mechanism, a collateral auction happens when there is a huge drop in the minimal collateralization ratio of the $CMST vault, falling below the required amount.
To restore the loss ratio, the collateral auction is carried out, and $CMST is burned until the liquidity is more than enough to serve as the collateralization ratio, leading to overcollaterization.
One thing to note is your loss of access to your vaults while the collateral auction is going on. You would have your right back when the auction is over. But how are they carried out?
The duration of collateral auctions is set before time, via governance. They begin by calculating the number of assets to be auctioned based on the market price of the collateral. While the auction goes on, the asset value declines in a linear manner.
You can place your bids at different prices until the duration runs out, or the whole bid collateral is sold off. When collateral is left unsold after the duration runs off, the auction for that asset resets along with the current market price.
The amount that is to be recovered from the collateral auction is calculated as the sum total of the remaining debt amount and that of the liquidation fee.
When the uncertainty prevails, and the art of liquidation does not work to keep the $CMST grounded in liquidity, Harbor uses debt auctions of $HARBOR tokens that have been newly minted, in the place of the $CMST stablecoin.
In this auction, the $HARBOR token will be bid on, in lots for minimum lot sizes of the token. After the auction, the $HARBOR tokens are burned to keep the liquidity floating.
Unlike the collateral auction, which makes use of the $CMST token and dutch auction mechanism, the debt auction is carried out via a reverse auction mechanism and the $HARBOR token.
A debt auction follows almost the same pattern; the duration of the event is planned ahead of time, by the act of governance voting, and $HARBOR tokens are burned after the procedures.
When many bids are placed without a final sale-off, the auction would continue till the duration folds up. When only a single bid is placed, the auction will end when the time runs out.
The week of September 17th to 25th has so far seen the following changes taking place within the Comdex network.
The final auditing of governance contracts for the Comdex mainnet.
Elimination of major bugs found to stain the CosmWasm mechanism.
Eleventh-hour change made to the supposed bug bounty program.
About Comdex Network
The Comdex chain now serves as a DeFi infrastructure layer for the Cosmos ecosystem. Essentially this means that Comdex provides a variety of interoperable plug & play modules for projects to use to create their own DeFi platforms providing utility to the Cosmos community as well as DeFi users worldwide
Democratization of finance is likewise the core principle of this network, and they are key to aiding the promotion of the digitization of physical commodities, especially for user profiting.
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