Operators

Ember Network has a set of operators running everything. We wouldn’t need operators if we were dealing with individual lenders rather than a lending pool. Operators set up DLCs on Bitcoin L1, add new LoanTransactions to Ethereum Smart Contracts and approve these transactions. A part of interest paid by borrowers is redirected to operators as rewards. Each operator has to restake a minimum of 32 ether to participate. Operators can get slashed if

• they don’t participate in transaction approvals. Each transaction requires a supermajority (⅔) of approvals, if nodes skip this step, the system could come to halt. To avoid this, not participating in approvals is penalised (partial slashing)

• they reject a transaction when supermajority approved, or vice versa (partial slashing)

• they try to steal funds from the liquidity pool (full shashing)

In theory, if a supermajority of nodes collude (66% or more), nodes can create fake LoanTransactions, initiate fake loans, and steal lending funds. This can be avoided, lenders can flag loans as invalid. If a loan is marked invalid, all funds must be returned by the user within 3 days, and the loan has to be closed. An operator cannot withdraw restaked ETH before 7 days (cooldown period), ensuring they remain bonded and accountable during the resolution period. This gives the protocol enough time to detect malicious behavior and enforce penalties if needed. If a flagged loan doesn’t get closed within 3 days, all operators will be equally slashed to repay the loan, creating strong financial disincentives against misbehavior. The slashed ETH is then used to cover the bad debt and protect the lending pool. The total restaked ETH is always greater than the lending pool, so lenders never lose funds, and the system remains secure and economically sound even under worst-case collusion scenarios.

Every 24 hours, a random operator is selected and chosen as an aggregator. To do so, we require on chain automation and on chain randomness. For this purpose, Chainlink Automation and Chainlink VRF (Verifiable Random Function) are used. A job runs every 24 hours, which generates a random number. This random number is used to pick a random operator and they’re assigned the role of an aggregator. An aggregator checks for any incoming loan requests, sets up new DLCs, and creates new LoanTransactions. Other operators simply approve or reject transactions.