Isolation Mode

Isolation Mode aims at enhancing the flexibility and safety of engaging with newly listed assets within our ecosystem. This mode is specifically designed to manage the risks associated with new or volatile assets while still allowing users to participate in borrowing and lending. Here's an in-depth look at how Isolation Mode functions within the Unleash Protocol:

Isolation Mode Overview

Isolation Mode in Unleash Protocol allows for the listing of new assets as "Isolated," which are subject to a specific debt ceiling. This limitation ensures that the amount borrowed against these isolated assets does not exceed a predetermined value in USD, enhancing the platform's stability. Users can engage with these isolated assets under specific conditions, primarily focusing on stablecoin borrowing that Unleash Governance has approved for Isolation Mode.

Operating Within Isolation Mode

Supplying Isolated Assets: Users can supply an Isolated Asset to the Unleash Protocol using a similar method to other assets. However, the ability to use these assets as collateral is conditional:

• Enabled as Collateral: This status is automatically granted if the Isolated Asset is the first asset supplied by the user or if no other supplied asset is currently enabled as collateral by the user.

• Disabled as Collateral: If the user has other assets enabled as collateral, the supplied Isolated Asset can still earn yield but cannot be utilized as collateral.

Borrowing in Isolation Mode: Borrowing within Isolation Mode is restricted to the specific Isolated Asset used as collateral, and users can only borrow stablecoins designated as borrowable under this mode. Furthermore, borrowers cannot enable other assets, including other isolated assets, as collateral while operating in Isolation Mode.

Exiting Isolation Mode: To exit Isolation Mode, users must first ensure they have no outstanding debt against the Isolated Asset. Repaying all debt allows the user to disable the isolated asset as collateral, effectively leaving Isolation Mode. This process ensures that transitions in and out of Isolation Mode are smooth and risk-managed.

Isolation Mode is Unleash Protocol's strategic response to the challenges of incorporating new and potentially volatile assets into a IPFi. By allowing users to engage with these assets in a controlled and secure manner, Unleash Protocol not only protects the platform's integrity but also offers users novel opportunities for yield generation and asset exploration.