# Custody & Security

## Overview

Libre's security model is built on **segregated Bitcoin collateral** and **transparent smart contracts**. Unlike traditional lending platforms, every borrower's Bitcoin is held in a dedicated vault address that can be audited by anyone.

## Segregated Collateral System

### Individual Vault Addresses

* **One vault per loan**: Each borrower gets a unique Bitcoin address
* **No pooled collateral**: Your Bitcoin is never mixed with others
* **Public verification**: Anyone can audit vault balances on the Bitcoin blockchain
* **Direct ownership**: Only the borrower (upon repayment) can access their Bitcoin

### Why This Matters

Traditional lending platforms often:

* Pool all collateral together
* Use customer funds for trading or yield farming
* Provide limited transparency about fund usage
* Create systemic risks if the platform fails

Libre eliminates these risks through complete segregation and transparency.

## On-Chain Verifiability

### Bitcoin Transparency

Every aspect of collateral is verifiable:

* **Vault addresses**: All loan vault addresses are public
* **Collateral amounts**: Real-time Bitcoin balances visible on-chain
* **No rehypothecation**: Bitcoin stays untouched in vault addresses
* **Audit trail**: Complete history of deposits and withdrawals

### Smart Contract Security

* **Open source**: All smart contracts are publicly auditable
* **Automated execution**: Liquidations and settlements happen programmatically
* **No human intervention**: Reduces counterparty risk
* **Battle-tested**: Built on proven DeFi primitives

## Liquidation Safety

### Transparent Rules

Libre's liquidation process is completely predictable:

| LTV Ratio        | Status           | Borrower Action               | Timeline  |
| ---------------- | ---------------- | ----------------------------- | --------- |
| 0-70%            | Safe Zone        | Monitor                       | Ongoing   |
| 70-80%           | Warning Zone     | Consider adding collateral    | Ongoing   |
| 80%+             | Liquidation Zone | Must act to avoid liquidation | 72 hours  |
| 80%+ (after 72h) | Liquidation      | Automatic execution           | Immediate |

### 72-Hour Buffer

* **Grace period**: Borrowers have 72 hours to respond once LTV hits 80%
* **Multiple options**: Add collateral, partial repayment, or full repayment
* **Fair warning**: No surprise middle-of-the-night liquidations
* **Market volatility protection**: Time to react to Bitcoin price movements

### Liquidation Process

When liquidation occurs:

1. **Smart contract execution**: Automatic and transparent
2. **Market rate sale**: Bitcoin sold at current market prices via libreDEX
3. **Lender protection**: USDT lenders are repaid first
4. **Excess returned**: Any remaining Bitcoin goes back to borrower

## Cross-Chain Bridge Security

### MPC + TSS Technology

Libre uses Multi-Party Computation (MPC) with Threshold Signature Schemes (TSS):

* **Distributed key management**: No single point of failure
* **Validator consensus**: 21 validators secure the bridge
* **Bitcoin finality**: Transactions confirmed on Bitcoin blockchain
* **Transparent operations**: All bridge transactions are publicly visible

### Bridge Auditing

* **Real-time monitoring**: Track all Bitcoin deposits and withdrawals
* **Validator transparency**: All validator operations are logged
* **Emergency procedures**: Protocols for handling edge cases
* **Regular audits**: Ongoing security reviews and improvements

## Risk Mitigation

### For Lenders

* **Overcollateralization**: All loans backed by 200%+ Bitcoin value
* **Segregated collateral**: Each loan has dedicated Bitcoin backing
* **Smart contract automation**: Reduced human error and manipulation
* **Transparent liquidations**: Predictable and fair process

### For Borrowers

* **Dedicated vaults**: Your Bitcoin stays separate and identifiable
* **Predictable liquidations**: 72-hour warning system
* **No rehypothecation**: Your collateral is never used for other purposes
* **Direct ownership**: You can verify your Bitcoin's location anytime

### For the Platform

* **Decentralized operation**: No central points of failure
* **Open source code**: Community verification and improvements
* **Validator network**: Distributed consensus for security
* **Regular audits**: Ongoing security assessments

## Comparing Security Models

| Feature            | Libre                   | Traditional Platforms     |
| ------------------ | ----------------------- | ------------------------- |
| Collateral Storage | Segregated vaults       | Pooled custody            |
| Transparency       | Fully on-chain          | Limited visibility        |
| Liquidation Notice | 72-hour buffer          | Often immediate           |
| Fund Usage         | Bitcoin stays untouched | May be deployed elsewhere |
| Verification       | Anyone can audit        | Trust-based system        |
| Smart Contracts    | Open source             | Often proprietary         |

## Security Best Practices

### For Users

* **Verify vault addresses**: Always confirm your Bitcoin vault address
* **Monitor LTV ratios**: Keep track of your loan health
* **Understand liquidation rules**: Know the 72-hour warning system
* **Use secure wallets**: Protect your private keys

### For Developers

* **Audit smart contracts**: Review all code before interacting
* **Test on testnet**: Verify functionality before mainnet use
* **Monitor validator health**: Track bridge and consensus security
* **Report issues**: Contribute to platform security improvements

## Code Audits

Libre's smart contracts and infrastructure have undergone comprehensive security audits by leading blockchain security firms:

### CertiK Audit

* **Platform**: [Skynet by CertiK](https://skynet.certik.com/projects/libre)
* **Scope**: Smart contract security analysis and blockchain infrastructure review
* **Status**: Ongoing monitoring and security assessment

### Auditeur.ai Analysis

* **Platform**: [Auditeur.ai](https://auditeur.ai/results/libre.org)
* **Scope**: Automated security analysis and vulnerability detection
* **Coverage**: Comprehensive codebase evaluation

These audits provide independent verification of Libre's security practices and help identify potential vulnerabilities before they can impact users.

## Getting Help

If you have security concerns or questions:

* **Documentation**: Review technical details in our developer docs
* **Community**: Join discussions in our governance forums
* **Support**: Contact team through official channels
* **Audits**: Review public security audit reports at the links above

The security model is designed to be **trustless, transparent, and verifiable**. You don't need to trust Libre—you can verify everything yourself on the blockchain.