The S in S.P.H.E.R.E. stands for Security
Preface: The following Medium Article is from Sphere Finance’s inception. Since then, Sphere Finance as a protocol & ecosystem has evolved. To be more up-to-date with Sphere, we recommend you check out our other Medium articles & our documentation.
This article should have been much shorter when we first wrote it. If you read on you will understand. Disclaimer: We have no intention of attacking any protocol or defaming anyone.
Greetings, Gigachad. I’m sure you’ve noticed all the rug pulls around you, all the OHM forks that rugged, the “node” protocols that have done rug pulls and so on. This article explains how we restrict ourselves to provide you, the user, with a much safer environment. It is to be hoped that further protocols will follow suit in the future.
Safety Mechanism A)
Anti-drain mechanism
For our whitelist sale, we use our friends at Mai.Finance’s stablecoin, $miMATIC. The safety concern with using $miMATIC that we faced was the approval feature. Basically, the feature allows other contracts to use your funds. The approval feature can be used to redeem 115792089237316195423570985008687907853269984665640564039457584007913129639935 (maximum of unit256) tokens for most contracts.
We’ve added a security mechanism for our users to help with this.We only ask 4000 $miMATIC as potential credit if you commit to whitelisting on our site. Why 4000? Simple, it’s our maximum quota for whitelist presales.
You do not need to invest 4000 $miMATIC. You simply allow the contract to use 4000 $miMATIC, if you wish so.
You can quickly revoke our contract’s access to your post-whitelisted $miMATIC by clicking the “Disallow” button on our website after purchasing the desired amount of tokens. This will set the allowed amount of tokens ($miMATIC) to 0 and basically we can’t use any $miMATIC in your wallet anymore.
Safety Mechanism B)
The Minting Problem
In this exhibition we will compare ourselves to Titano. We appreciate their great idea and will try to extend the incredible protocol they have built. But we also need to talk about their mistakes and what we did about them.
Minting a token at the beginning is fine. The problem with Titano’s contract right now is that they can mint at any time. Basically, the contract holder can mint, say, 5 billion tokens and sell them on PancakeSwap and empty the entire LP pool, bringing the price down to almost 0. We disabled the minting feature and distributed 5 billion tokens to the protocol at launch (at the time of writing). Manually minted tokens are never used. The tokens used now are the only ones available (except for the rebase mechanism which quantifies your tokens). This cannot be reversed and you can read our contract to confirm it yourself. The code is law.
The Taxation Problem
For this exhibit, we will also introduce a secondary player in here. Libero.Financial and their false promises.
SPHERE is currently subject to sales tax at 20% and purchase tax at 13%. We can increase the tax rate to 25% (for both) at any time. We did this for one main reason: we wanted to be able to serve the needs of the community while having a buffer in case certain tax rates should be adjusted (Liquidity, Treasury, RFV, etc.) without moving to a new contract in order to do so. Transparency and honesty are the most important values for us. All of that is well and good, but what’s the catch? Other protocols in the past (e.g. Titano V1) had a security flaw as they could effectively increase the tax fees to 100%. Basically, that means you would sell your tokens at a 100% loss (if Titano put it at 100%). This is also reflected in their audit. Libero added a maximum tax threshold of 65%. Their reasoning behind this is to “reassure” investors when a whale would “FUD” their pockets and cause huge volatility to the token’s price. Basically force users to stay in the protocol rather than sell at a 65% ADDITIONAL loss. That doesn’t sound very libertarian. We believe the market will regulate itself, so we are leaving our maximum tax rate at 25%. You could pay up to 5% more than you intended, but you would still be paying about 40% less than Libero’s contract and 75% less than Titano’s v1 contract (all of this is hypothetical, but we’re playing it safe ).
Safety Mechanism C)
In this exhibit we will talk about the most overlooked security problem in crypto, their actual website.
Many protocols are baffled by the risks that smart contracts are but are not equipped against other malicious activities. DDoS attacks are one of them. You can learn more about DDoS attacks here.
As crypto grows, so does its share of the activity pie. We do not want to be exposed to these activities and have sought shelter at Cloudflare. Our website is deployed to their global network, spanning over 250 cities in 100+ countries. The global average latency of Cloudflare and therefore our website will be reachable in less than 0.10 seconds. DDoS attacks are removed from their network and our website should be online 99.9% of the time (you never know if there might be an outage).
Safety Mechanism D)
In this exhibit we will talk about the fear of Titano, whales.
Titano has banned a whale from selling tokens as of February 10th, 2022. We understand their intentions, but we don’t believe that’s the best way to go about things. Taking someone else’s token and “burning” it against their consent is tantamount to stealing it. Fix the root of the problem, not the symptoms. As a result, we’ve set a limit on how many tokens can be sold in a single transaction. You can always sell more than once, but you can’t sell too much at the same moment. This effectively results in a “whale fall” (TL;DR: whales relinquish their position and “die” — providing other fish something to eat, basically the food being the whale’s position) — More information is available on Wikipedia.
A more detailed example: A whale sells $100,000 SPHERE for $100,000. Thanks to the tax system, they get $80,000 and $20,000 goes back to the protocol, which a) dumps the price less than without the taxation system in place and b) supports the longevity of the protocol. Smart investors then buy the dip and make 1 $SPHERE > $0.80, effectively pushing the whale off their position and creating more stability within Sphere by distributing it to more investors.
Of course this is all hypothetical, but thanks to our tax structure we will be able to maintain a constant minimum price even if whales are selling! We hereby force a Dollar Cost Average for everyone. This is actually really beneficial to the protocol, as said before, it allows new investors to get in at a lower cost, which is exactly what we want. We want a continuous stream of new investors to join us! Nevertheless, we would like to thank everyone who is involved in the cause. We just don’t want the price to crash and instill fear within our investors. The race is won by going slow and steady.
We take security very seriously. If you have more security ideas, feel free to share them with us on Discord!
