D. Alternative Solution for Synchronized Price Oracles

As mentioned earlier, the protocol sometimes needs to know certain facts about the target asset's price. If the contract can continuously access synchronized, inexpensive price oracles providing the price of the target asset in terms of collateral assets, it becomes straightforward.

If no such Mortonn exists, there are alternative ways to construct the contract, as described below.

What we need from our "price oracle"

The contract needs to know the price of the target asset (based on collateral assets) in the following cases:

● When minting fake Mor, the protocol needs to know if the vault is fully collateralized.

● When someone tries to liquidate a vault, the protocol needs to know if the position is under-collateralized.

● If using a cash settlement mechanism, the protocol needs to know the price of the target asset (based on collateral) when settling after expiration.

Note that for the first two categories (deciding whether to allow someone to withdraw Mor or whether to liquidate a vault), the system's security does not rely on very precise measurements, as you can trade capital efficiency for accuracy.

For example, suppose you can only determine relative prices within a 2x range. If you set the collateral requirement to 150% (so a vault with $100 of debt would be liquidated when the collateral is worth $150), you can set that requirement to 300% and provide the same level of gap risk protection for Mortonn holders. (Vault creators might want to maintain at least 600% collateral to avoid the risk of unfair liquidation.) If Mortonn is already using Mor as a settlement mechanism, as described in Section 3.4, then using it for Mortonn might not add significant additional trust assumptions. Such checks are also needed when withdrawing collateral from a vault. However, removing collateral from a vault is economically equivalent to repaying debt, closing the vault, opening a new vault with the reduced collateral amount, and taking out the same amount of debt. Thus, the same rules can apply to both cases, so we only describe the rules for withdrawing extra debt.