According to a post by Monad co-founder Keone Hon, lending protocols should implement rate limits on the supply of collateral assets. For example, if the current supply is $100 million with a cap of $300 million, the supply should be allowed to grow by no more than $10 million within 10 minutes—rather than allowing a single deposit of $200 million. This would reduce losses from attacks, such as the $200 million in losses that rsETH depositors could have avoided. Hon also noted that asset issuers should support this mechanism, and high supply caps should be viewed as a risk, not a sign of strength. He cited the Hyperbridge DOT attack, which did not result in $100 million in losses due to limited exit paths, and the Resolv attack, which caused $240 million in losses instead of $2 billion due to constrained path sizes. Hon recommends auditing and reducing unnecessary supply caps.
Monad Co-Founder Suggests Rate Limits for Lending Protocols to Mitigate Attack Risks
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Summary
Interest rate insights from Monad co-founder Keone Hon suggest that lending protocols should implement rate limits on collateral deposits. For instance, if the current supply is $100 million with a cap of $300 million, the supply should increase gradually—such as to $110 million over 10 minutes—rather than surging by $200 million all at once. This could help prevent massive losses from attacks, potentially saving rsETH depositors up to $200 million. Hon emphasized that asset issuers must support these measures, as high supply caps are risky, not a sign of strength. He referenced the Hyperbridge DOT and Resolv attacks, where lower caps mitigated losses. Digital asset news reports he also called for thorough audits and stricter supply caps.
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