Recovery Kit
Just-in-time liquidity has one downside - when lending liquidity to user on one chain - we need to make sure that user has enough liquidity to cover the trade on another network. Giving user direct access to the wallet means they could easily trick us into lending them liquidity on one network while stealing collateral on the other network.
The only way to prevent this is to give BREAD power to decide which transactions can be actually executed against wallets, so we can be sure that we can always redeem lended liquidity from another network.
This means that while BREAD cannot access users' funds, it is in position to censor transactions and freeze funds indefinitely. Having this power is not something that we want.
This is where Recovery Kit comes in:
Users can generate a special signing key we call "Recovery Kit"
It allows them to execute "exit procedure" on their wallets - without going through BREAD.
When executed, BREAD has limited time (eg. 6 hours) to redeem any outstanding liquidity.
When it happens, wallet will no longer be usable through BREAD.
After 6 hours, user will be able to withdraw their funds from the wallet directly and move them somewhere else.
This is a simple, yet effective way to make sure that any funds deposited to BREAD are always fully owned by the users, not by us.
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