Protocol Modes

Modes Overview

The Based Protocol operates in different modes depending on the overall health of the system (Total Collateral Ratio - TCR) and administrative actions. These modes affect certain operations like borrowing or interacting with the protocol via smart contracts:

Mode	Entry/Exit Criteria	Purpose
Normal	TCR ≥ 125%	Full protocol functionality
Recovery	TCR < 125%	Blocks creation of low CR debt and incentivizes users to borrow with higher CR
Maintenance	Admin	Withdraws only. Intented for protocol upgrades.
Paused	Admin	Emergency pause

Recovery Mode

Individual vaults have a minimum collateral ratio of 110%. Similarly, the global state of all vaults in Based has a minimum collateral ratio, Total Collateral Ratio (TCR), of 125%. TCR is the dollar value of all collateral divided by the dollar value of all debt. Recovery Mode is a temporary state that activates when the TCR < 125% and deactivates when TCR ≥ 125%

Recovery mode only affects the behavior of vaults and borrowing:

• Borrowing fees are set to 0%. Redeem fees are unchanged.

• New debt can only be created ≥ 150% collateral.

• Collateral can only be removed if a specific vault CR remains ≥ 150%

• Repaying debt and adding collateral function normally.

Maintenance mode

Intended for protocol maintenance such as contract upgrades or migrations.

• Blocks borrowing (mint-loan-wrapper )

• Blocks adding collateral (add-collateral-wrapper )

• Blocks updating the interest rate (update-interest-rate-wrapper )

• Repaying debt allowed (repay-loan-wrapper)

• Redeeming BSD allowed (redeem-wrapper)

• Withdrawing collateral allowed (withdraw-collateral-wrapper).

• Stability pool interactions allowed.

Paused Mode

Emergency stop due to exploit, oracle failure or similar unforeseen problems. Blocks all user-facing actions including borrowing, redeeming, repaying, withdrawing, and stability pool interactions.