Liquidations

With the ability to calculate APYs for depositors and borrowers, the blueprint gives value to Depositors and Borrowers. Next, let's focus on Pool protection in the form of liquidations and additional risk management.

Liquidations are governed through the following parameters and cover 3 scenarios described in this chapter.

At Sandbox Release, liquidations are under multisig managed by the team. There is no bonus for protocol for liquidations and rewards will be distributed to XRD Depositors in the future.

Liquidation Params

// Max Percent of the user debt that could be liquidated
max_liquidation_percent
// Liquidation bonus for the user
liquidation_bonus
// Liquidation reserve for the protocol
liquidation_reserve_factor
// Minimum reasonable value to be liquidated
min_liquidable_value

Max Liquidation Percent

The % of the user position that could be liquidated. Configurable per pool. [0-1] Typically 0.5. Set at 0.5 for a Sandbox Release.

Liquidation Incentives

The reward for the liquidation provider. Configurable per pool, [0-1] Typically 0.1. Set at 0.1 for a Sandbox Release.

Liquidation Reserve Factor

The reward for the Blueprint. Configurable per pool, [0-1] Typically 0.5. Set at 0 for a Sandbox Release.

Min Liquidable Value

When the cost of running the liquidation exceeds the potential reward, the exception is made and the whole position could be liquidated max_liquidation_percent = 1.