What triggers stress-mode escalation?

Two independent signal classes evaluated over rolling windows: net-sell-pressure as a fraction of available quote reserve (measured at 1, 6, and 24 hours), and price-decline as a fraction of both short-window and reference price marks (measured at 1 and 24 hours, and against a rolling reference). Crossing any single threshold is sufficient to escalate.

Why is the reroute described as asymmetric?

Only sell orders above the stress-scaled size cap are diverted off the automated-market-maker's pricing curve to a batch-auction or request-for-quote venue. Buy orders, and sells at or under the cap, continue executing directly against the curve at every stress level -- the control targets exit pressure specifically, not trading activity in general.

What happens to trading fees as stress escalates?

Each of the four stress levels prices a dynamic fee from its own range, escalating from a normal-mode range of roughly 0.30%-1.00% up to an emergency-mode range of roughly 5.00%-10.00%, so cost itself becomes a graduated deterrent alongside the size-based reroute.

Is escalation ever silently reversed mid-evaluation?

No. Within a single evaluation pass, the classification logic is monotonically non-decreasing -- if multiple signals are checked and one indicates a more severe level than another, the more severe level wins. The mode can still improve on a subsequent evaluation once conditions genuinely calm down.

Graduated Stress-Mode State Machine with Asymmetric Off-Curve Sell Reroute

Executive Summary

Most circuit breakers in decentralized trading are binary and symmetric — a single "halted" switch, or a flat fee bump applied uniformly to every order regardless of direction. Binary controls overreact, halting legitimate buyers along with panic sellers; flat, non-escalating fees underreact, staying too small to matter once a real cascade is underway.

ProofGuard's circuit-breaker module instead classifies a launch pool into one of four ordered stress levels — Normal, Elevated, Stabilization, Emergency — driven by rolling net-sell-pressure fractions and price-decline fractions measured across multiple time windows. Each level derives both a dynamic trading-fee rate from a level-specific range and a per-trade sell-size cap. Sell orders above that cap are rerouted off the automated-market-maker's pricing curve to a batch-auction or request-for-quote venue; buy orders and sells at or under the cap keep executing directly on-curve at every level.

Core Innovation: The control is direction-asymmetric by construction — the size cap is only ever checked in the sell path — so a pool under stress keeps functioning as a market for buyers while specifically dampening the sell-side pressure that is driving the stress in the first place.

Problem Statement

A single global trading halt treats every participant identically regardless of intent, which is both an overcorrection and a poor user experience for anyone trying to add exposure during a dip. A flat, non-graduated fee increase, meanwhile, either bites too early (discouraging normal activity under mild volatility) or too late (a fixed few-percent bump does little to deter a determined seller mid-cascade). Static per-block price-impact caps common in constant-product AMMs guard against one large trade but are blind to the same pressure accumulated across many smaller trades spread over hours.

Escalation levels, each independently reachable by either signal class

0.30%-10.00%

Dynamic fee range spanning Normal through Emergency stress tiers (default policy)

40%

Price decline from reference price at which vault support auto-disables regardless of any other control state

Technical Architecture

Escalation Triggers

Signal	Window	Trigger	Escalates To
Net sell pressure	1 hour	> 2% of quote reserve	Elevated
Net sell pressure	6 hours	> 5% of quote reserve	Stabilization
Net sell pressure	24 hours	> 10% of quote reserve	Stabilization + hard circuit breaker
Price drop	1 hour	> 10%	Elevated
Price drop	24 hours	> 15%	Stabilization
Price drop	24 hours	> 25%	Emergency
Price drop vs. reference	rolling	> 40%	Emergency + vault support auto-disabled

Every threshold check runs independently against the same evaluation, and the pool's classification takes the most severe level indicated by any single triggered check — escalation within one evaluation pass is monotonically non-decreasing, so a milder signal cannot mask a more severe one.

Fee Tier and Sell-Size Cap

The classified stress level selects a fee rate from that level's configured range and a per-trade sell-size cap computed as a fraction of the pool's quote reserve. The sell-throttle pipeline reads this cap and the current stress mode when evaluating each sell request: a sell within the cap executes normally, while a sell above the cap is redirected to route through a batch-auction (TWAMM) or request-for-quote execution path instead of hitting the AMM curve directly. Buy orders are never subject to this cap.

Anchored Mode Transitions

Every stress-mode change is cryptographically anchored with the full signal snapshot — each windowed net-sell fraction and each price-drop fraction — recorded in the anchored payload, giving a complete, reproducible picture of exactly which signal drove each escalation or de-escalation.

Prior Art Differentiation

Approach	Levels	Direction-Aware?	Multi-Window Signals?
Global trading halt	1 (binary)	No	No
Flat fee bump	1	No	No
Static per-block price-impact cap	1	No	No (single trade only)
JIL ProofGuard	4, graduated	Yes, sell-only reroute	Yes, multiple rolling windows

Patent Claim

Independent Claim 72: A computer-implemented method for managing sell pressure in an automated-market-maker pool comprising: computing, over a plurality of rolling time windows, a net-sell-pressure fraction relative to available quote-asset reserve and a price-decline fraction relative to both short-window and reference price marks; classifying the pool into one of a plurality of ordered stress-mode levels according to which of a set of per-window, per-signal thresholds have been exceeded, wherein the classification is monotonically non-decreasing within a single evaluation pass; deriving, from the classified stress-mode level, both a dynamic trading-fee rate selected from a level-specific range and a per-trade sell-size limit; and, for a pending sell order whose size exceeds the level-specific sell-size limit, routing execution of that order away from the automated-market-maker's pricing curve to a batch-auction or request-for-quote execution venue, while pending buy orders and sell orders at or below the limit continue to execute against the automated-market-maker's pricing curve.