Building robust DeFi markets is about deliberate design. Echoing insights summarized by one of the risk curators on recurring failure modes, Pike is engineered from day one to avoid them.🧵

2/ Failure Mode 1: Mis-set interest-rate models In utilization-based models, the “kink” is a monetary policy lever. • Too low: withdrawal liquidity evaporates, lenders feel trapped. • Too high: suppliers under-earn, spreads balloon, capital sits idle. Either way — fragility follows.

3/ Pike fixes this with a 3-slope Interest Rate Model (IRM) — an evolution beyond the classic 2-slope curve. • Low utilization: lower rates attract early borrowers and reward sticky deposits • Normal utilization: smooth transition avoids sudden jumps • High utilization: steep slope restores balance when borrowing surges

4/ Each market’s parameters are fine-tuned by the Governor (Curator), who can manage: • First & second kink points • Kink multipliers for each segment • Base rate settings per asset This flexibility lets Pike tailor interest curves for different market behaviors.

5/ This 3-slope IRM enhances liquidity predictability and rate stability during stress. No abrupt cliffs. No liquidity traps. And because Pike’s parameters are dynamically adjusted with real-time on-chain data and volatility metrics, they stay aligned with actual market conditions.

6/ Failure Mode 2: Fragile oracles for illiquid or self-reported assets Relying on a single oracle is asking for chaos. If one feed lags, breaks, or is manipulated, the entire collateral base becomes unstable. (Remind: Pike’s modular architecture isolates markets, so bad debt in one market never spreads to others.)

7/ Pike’s answer: the Dual-Oracle System. It cross-verifies price data from multiple oracles and automatically prioritizes the safer feed if one diverges. Governors can select preferred oracle sources per market, ensuring flexibility and redundancy.

8/ Pike’s Engine is built for resilience: • Dual-Oracle Architecture (e.g., Chainlink + Pyth) • A configurable Fallback Mechanism • Price Validation via automated bounds checking between main and fallback feeds • Transaction is reverted if ****neither oracle provides a valid price This multi-layered setup ensures accurate and tamper-resistant pricing, even in volatile markets.

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