Volatility indices are structurally easy to poison: a thin OTM strike printed once can move an unguarded aggregate by tens of points. The dampener treats any violent push as suspect until a second block agrees with it.
deviation = | P_new − P_last | / P_lastBelow the threshold the push settles at face value. Above it the push is distrusted, and the contract settles on a dampened step instead, clamped to the band:
P_settlement = α · P_new + (1 − α) · P_last, α = 0.05- P_last
- the last settled price
- P_anchor
- the settled price when the current block began
- band
- the result is held within ±20% of P_last and of P_anchor
- A distrusted push moves settlement 5% of the way toward it, and never past the band: a sixfold print moves it 20%, a crash to a tenth moves it 4.5%.
- The band is fixed for the whole block, so ten pushes of +19% inside one block still move settlement 20% at most. A compromised keeper cannot walk it further.
- Genuine repricing still propagates: a real move is confirmed block after block, and settlement converges on it.
- The dampened state is public: on-chain it stays flagged for 30 seconds after it trips, the order ticket and the terminal header read Dampened, and the analytics page records when the dampener engaged and released.
- Liquidations initiated while dampened are priced off the dampened value, never the raw push.
- FR-BASIS spreads have a band of their own, absolute rather than relative because a spread crosses zero: at most 5 bps per block by default, which the owner may set between 0.1 and 100.