Security First — Part Two of Two: Secure by Design
Before Code, There’s Design
Smart contracts are only half the picture. In Part One, we explored how code quality, audits, and immutable logic protect against bugs, exploits, and misuse. But even the safest contract can fail if the protocol it powers is not designed with security as the priority, right from the start.
At Strobe, we think security isn’t just about stopping bad actors, it’s about building systems that work safely by design, even when things get volatile. This article explains how protocol-level safeguards protect both users, and the protocol itself.
How the Protocol Protects You
- Over-Collateralization by Default
Every loan on Strobe is backed by more than it borrows. This isn’t just a rule, it’s a requirement enforced at the contract level. Users can only borrow a pre-defined percentage of their deposited value, creating a protective buffer that absorbs market swings before they become a threat. - Real-Time Health Factor Monitoring
Each account is assigned a health factor, a number that constantly reflects the safety of your position. If your collateral value drops or your borrowed amount increases, your health factor adjusts immediately. When it falls below 1.0, action is taken. - Automatic, Fair Liquidation
If a borrower’s health factor drops too low, a smart-contract initiates automatic liquidation. Liquidators repay part of the loan and, in return, claim a liquidation bonus on the collateral. This happens without human intervention, fast, predictable, and on-chain. - Dynamic Interest Rate Models
Interest rates in Strobe aren’t fixed. They adjust automatically based on market conditions, higher when borrowing demand is high, lower when borrowing demand slows. This encourages healthy supply and borrowing behavior while reducing the risk of illiquidity or runaway debt. - Isolated Asset Pools
Each market in Strobe operates independently. A volatile token in one market can’t bring down the rest. This siloed approach prevents contagion, making the protocol more resilient during times of stress. - Conservative Initial Parameters
At launch, Strobe enforces tight limits, from supply caps to borrow ceilings. These can expand over time, but only after usage and performance prove stable. It’s a phased approach that helps the system scale safely. - Collateral Whitelisting Only
Only assets explicitly approved by the protocol can be used as collateral. Each one is evaluated for liquidity, volatility, and risk. This stops users from supplying unvetted tokens that could undermine the system.
Trust the Rules, Not the Ruler
Unlike centralized platforms that rely on customer service teams or discretionary judgment, Strobe is rules-based by design. Anyone can inspect those rules and parameters, shared openly and updated regularly, in our supporting documentation. This is what separates DeFi from CeFi: transparency, automation, and self-custody.
As we grow, the protocol will evolve — but its core principle stays the same: protect user funds by default.
