The Intelligence Layer for Stability Markets

The Problem: Static Systems in a Dynamic World

Stability protocols like Liquity V2 rely on collateral ratios (CRs), redemption mechanics, and incentive parameters to maintain peg and solvency. But markets don’t stay still—and static parameters can’t keep up.

• Static parameters underperform across regimes: Volatility spikes, redemption waves, and liquidity cycles break assumptions, leaving value on the table.
• Fragmented stability pool = idle capital: Uneven CR distribution and scattered positions increase liquidation risk.
• Operational overhead: Constant monitoring, manual rebalancing, and governance churn slow down responsiveness and efficiency.

The result: suboptimal yield, higher risk, and more governance intervention.

Steer’s Solution: Intelligence for Stability

Steer introduces an autonomous, data-driven allocation layer for Liquity V2 stability pools — a system that doesn’t just react, but learns and adapts.

• Autonomous allocation: Dynamically rebalances across stability pools to improve yield efficiency.
• Capital optimization: Maintain the peg while increasing utilization.
• Plug-and-play upgrade: No migration, no custody—just smarter performance on existing infrastructure.

How Steer Helps Maintain the Peg

• Keeps stability pools deep and ready:
  Steer vaults keep liquidity parked in the stability pools that are used to liquidate troves and process redemptions, so there’s always capital available when the peg is stressed.
  
  
• Smooths redemptions and price moves:
  By making sure stability pools are funded and responsive, redemptions clear with less slippage, which helps the stablecoin trade closer to peg during volatile periods.
  
  
• Enables fast, orderly liquidations (not cascades):
  Healthy, well-funded stability pools mean under-collateralized troves are cleared quickly and cleanly, reducing the risk of drawn-out liquidation spirals that can break confidence in the peg.
  
  
• Converts stress into yield, not chaos:
  When markets are choppy, more liquidations happen. Steer turns those events into predictable yield for stability depositors instead of disorderly selling pressure, supporting overall market stability.
  
  
• Reduces governance “panic buttons”:
  With automated, policy-bounded liquidity in stability pools, the protocol relies less on emergency parameter changes to defend the peg and more on built-in mechanics that are constantly funded and optimized.

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How It Works: From Signal to Stability

1. Sense

The vault ingests real-time on-chain and market data: collateral ratios, redemption volumes, oracle feeds, volatility metrics, AMM depth, and funding rates.

2. Decide

Risk engines score each Stability pool across multiple dimensions — health, carry potential, liquidity availability, and path-dependent risk.

3. Act

The vault reallocates collateral and debt within policy-defined bounds. All actions are throttled and executed non-custodially via smart contracts.

4. Learn

Feedback loops refine the risk models, adjusting sensitivity and thresholds per market regime to continually improve outcomes.

Why It’s Safe

Every adaptive move stays inside strict guardrails.

• Policy-bounded actions: Maximum movement percentages, collateral ratio floors, and redemption buffers.
• Non-custodial execution: Funds remain under the user’s control; all actions are on-chain and auditable.
• Deterministic logic: No hidden heuristics — every state change is traceable and verifiable.

Think of it as autopilot with a manual override, not a black box.

The Results You Can Expect

• Higher, more consistent stability yield.
• Healthier system-wide collateral ratios that reduce redemption spirals.
• Fewer governance interventions and emergency parameter votes.

Over time, the system’s intelligence compounds—learning from market patterns, optimizing capital, and smoothing system behavior.

Integration: Simple as 1–2–3

1. Connect Steer to your stability pool contracts.
2. Select your policy: Conservative, balanced, or aggressive.
3. Go live. Track everything through dashboards and on-chain telemetry.

No migration. No downtime. Just smarter stability pool.

Performance Signals to Watch

To evaluate Steer’s effectiveness, track these on-chain metrics:

• Vault APY (net of fees)
• Weighted CR dispersion (system health indicator)
• Redemption slippage
• Liquidation incidence rate

Together, they form a real-time picture of how adaptive intelligence improves stability and yield.

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