FAQs
Operator Control and Restrictions
Q: Do operators have full control over collateral once disbursed?
No. The operator set will be comprised of regulated financial institutions that enter into legal agreements with restakers to restrict permissible strategies.
Q. How does the protocol ensure there are no risky strategies?
Restakers bear direct risk for their delegation choices. By underwriting specific operators, restakers incentivize due diligence on strategy viability.
Q: Are there caps on collateral lent to operators?
Yes. Delegation limits and nominal exposure thresholds prevent concentration risk.
Loan Security
Q: Does the protocol impose minimum overcollateralization requirements on restakers?
Yes, the protocol checks the collateralization ratio before the operator can borrow. The overcollateralization ratio is different for every collateral asset and is set conservatively to prevent any unexpected liquidations.
Q: Which assets are accepted as restaker collateral?
Only blue-chip cryptocurrencies: ETH, wBTC, Liquid Staking Tokens (LSTs), and stablecoins.
Q: What happens if restakers withdraw their delegation mid-loan?
Restakers and operators should have a prior agreement when restakers intend to remove delegation for position unwinding. Unilateral withdrawals will trigger slashing. Note that there is a built-in buffer period in Shared Security Networks to mitigate an accidental withdrawal.
Shared Security Network
Q. How is Slashing and Redistribution used in Cap?
Malicious or undercollateralized operators are autonomously slashed, where restaker delegations are redistributed back to the stablecoin holders.
Q. How does Cap differ from other restaking protocols?
Cap replaces passive Proof-of-Stake rewards with productivity-based incentives:
Restakers earn premiums tied to operator performance.
Operators retain surplus yield, fostering competitive strategy innovation.
Cap takes an innovative approach of rewarding restakers on an operator basis, where counterparty risk is established one-to-one with the operator they are underwriting. This architecture allows operators to take more agency and be rewarded for their productivity.
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