# 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**. 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