How Does Bucket CDP Work?
Bucket Protocol is the leading CDP (Collateralized Debt Position) platform on Sui, allowing users to deposit SUI, BTC, ETH, or liquid staking tokens as collateral to borrow BUCK, an over-collateralized stablecoin pegged to $1. With $14M in TVL and integrations across major Sui DeFi protocols, BUCK holders can also earn yield via the sBUCK Savings Pool. The B- risk grade reflects its proven CDP model with real-time liquidation, balanced against correlated liquidation risk and Sui ecosystem dependencies.
TVL
$15M
Sector
CDP
Risk Grade
C+
Value Grade
D
Core Mechanisms
6.1.1
Over-collateralized CDP with SUI, BTC, ETH, and LST accepted as collateral to mint BUCK stablecoin at fixed low-cost borrowing rates
Standard MakerDAO-style CDP model adapted for Sui
6.3.2
Real-time liquidation mechanism that liquidates undercollateralized positions to maintain system solvency
Fixed-spread liquidation similar to Liquity/MakerDAO
6.4.1
External oracle price feeds for SUI, BTC, ETH, and LST collateral valuation
Standard oracle dependency for CDP collateral pricing
1.4.3
BUCK stablecoin pegged to $1 via PSM (Peg Stability Module), Tank module, and redemption mechanism
Multi-mechanism peg stability similar to MakerDAO PSM
2.2.1
sBUCK staking allows BUCK holders to earn yield from Savings Pool — interest distributed to stakers
Standard savings rate mechanism like DAI Savings Rate
6.2.2
Fixed borrowing cost for CDP positions rather than variable interest rate curves
Liquity-style one-time borrowing fee model
4.3.4
Flash loan services built into protocol to facilitate BUCK price arbitrage and stability maintenance
Protocol-owned flash loans for peg stability
How the Pieces Interact
Correlated crypto downturn triggers simultaneous liquidations across SUI, BTC, ETH collateral — liquidation cascades amplify selling pressure across all assets
Oracle price feed delay during rapid market movements creates a window where positions are underwater but not yet liquidated — bad debt accumulates
If savings rate attracts most BUCK supply into staking, reduced circulating BUCK creates thin DEX liquidity that makes arbitrage-based peg maintenance less effective
Flash loans intended for peg stability could also be used to manipulate oracle prices or exploit liquidation mechanisms in the same transaction
Fixed fee does not adapt to market conditions — during high-demand periods, underpriced borrowing can lead to excessive leverage that amplifies future liquidation cascades
What Could Go Wrong
- BUCK stablecoin relies on real-time liquidation mechanisms — if oracle price feeds lag during rapid SUI price declines, undercollateralized positions may not be liquidated fast enough, creating bad debt
- Multi-collateral CDP with SUI, BTC, ETH, and LSTs creates correlated liquidation risk — a broad crypto downturn triggers simultaneous liquidations across all collateral types
- Sui ecosystem is relatively young — BUCK's utility and stability depend on continued growth of Sui DeFi integrations (Cetus, Navi, Scallop) that provide demand sinks for the stablecoin
SUI Flash Crash Liquidation Cascade
ModerateTrigger: SUI price drops 40%+ in under 2 hours, overwhelming the liquidation mechanism
- 1.SUI price crashes rapidly, pushing majority of SUI-collateralized CDPs below liquidation threshold — Mass liquidation events triggered simultaneously
- 2.Liquidators sell SUI collateral into an already declining market — Additional sell pressure accelerates SUI price decline
- 3.Some positions become undercollateralized faster than liquidation can process — Protocol accumulates bad debt — BUCK backing insufficient
- 4.BUCK depegs below $1 as market recognizes undercollateralization — sBUCK holders and BUCK integrations across Sui DeFi affected
- 5.Contagion through Sui DeFi ecosystem — protocols using BUCK as collateral face cascading liquidations — Systemic risk event for Sui DeFi ecosystem
Risk Profile at a Glance
Overall: C+ (36/100)
Lower score = safer