Risk and Mitigation Responsibilities of Governance

ADADAO Governance must take the required actions to mitigate risks in order for the ADADAO Protocol to function properly. Some of these threats are listed below, each with a mitigation strategy.
  1. 1.
    A malicious attack on the smart contract infrastructure by a bad actor: for example, a programmer who discovers a flaw in the deployed smart contracts and then exploits it to break the Protocol or steal from it—is one of the greatest threats to the ADADAO Protocol.
    MITIGATION : The ADADAO Protocol's security is the Foundation's top priority, and Formal Verification is the Protocol's strongest defense. We will get the smart contracted audited from the best auditing firms and from multiple sources in order to create a smart contract which is free from flaws.
  2. 2.
    A black swan event: A black swan incident is a rare and serious system-wide surprise strike on the ADADAO Protocol. Examples of a black swan event include:
    ● An attack on the collateral types that backs AUSD.
    ● A large, unexpected price decrease of one or more collateral types.
    ● A highly coordinated Oracle attack.
    ● A malicious ADADAO Governance proposal.
    MITIGATION : While no single solution is fool proof, the ADADAO Protocol's careful design (the Liquidation Ratio, Debt Ceilings, Governance Security Module, Oracle Security Module, Emergency Shutdown, and so on) combined with good governance (quick response in a crisis, thoughtful risk parameters, and so on) help to prevent or mitigate the potentially severe consequences of an attack.