Unchained Circuit Breakers: Is ERC-7265 the Solution dApps Were Waiting For? - Ep. 515
Jul 7, 2023
Philippe Dumonet, Cofounder of DeRegLinks, discusses the crucial ERC-7265 proposal aimed at enhancing DeFi security. He highlights the alarming rise in crypto crime, with $3.8 billion stolen last year. The proposal introduces a 'circuit breaker' to protect decentralized applications, balancing security and governance. Dumonet explains how this could potentially centralize some protocols while improving the safety for newer teams. He also addresses the need for robust security measures in light of historical vulnerabilities and recent market challenges.
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ERC-7265's Safety Layer
- ERC-7265 creates a generalized safety layer for DeFi contracts.
- This design protects funds even if the core logic has vulnerabilities.
Circuit Breaker Concept
- A circuit breaker is an emergency tripwire, like on traditional exchanges.
- It pauses the system during emergencies or irregularities, allowing for a cooling-off period.
NASDAQ Circuit Breaker Example
- The NASDAQ uses circuit breakers to halt trading if an asset falls too far.
- This prevents cascading sell-offs due to panic, giving people time to reassess.