Surplus Buffer Design

Surplus buffer design involves creating an economic structure that accumulates excess fees and revenue to serve as a safety net for the protocol. This buffer acts as a reserve that can be tapped into when the protocol faces unexpected losses or market downturns.

A well-designed buffer is essential for the long-term viability of decentralized lending. It provides a cushion that prevents the need for more drastic measures like debt auctions.

The design must account for the rate of accumulation and the conditions under which the buffer can be used. It is a fundamental part of the protocol's tokenomics and risk management framework.

By consistently building this buffer, the protocol demonstrates financial responsibility and resilience. It is a key metric for evaluating the maturity of a DeFi platform.