In Unit protocol, every USDP is fully backed by provided collateral. If the debt/collateral ratio exceeds a Liquidation Ratio(LR) for a Collateralized Debt Position(CDP), it will be subject to liquidation. Anyone can trigger liquidation by sending a trigger transaction. There are liquidation bots that consistently monitor CDPs and trigger liquidations if the stated condition is met.
After a CDP is triggered for liquidation, a Dutch auction starts for underlying collateral with a linear decrease in price. (the price decremental step can be different for various assets, but for the most amount of assets it is ~0.09% decrease per block).
Every participant can buyout the part of the collateral for the current price by paying the USDP debt for a liquidated CDP. USDP debt is equal to borrowed USDP amount plus the liquidation fee in % from this amount.
After collateral realization, the remaining part is returned to the borrower's address. His USDP debt is burned, and the liquidation fee is sent to the governance pool address for fee distribution.
Subscribe to Unit protocol bot in telegram https://t.me/unit_protocol_pulse. It will push notifications if a CDP is triggered for liquidation.
Use liquidation dapp https://liquidation.unit.xyz/ to check current liquidation parameters and buyout the collateral.
function triggerLiquidation(address asset, address user) to contract 0x0e13ab042eC5AB9Fc6F43979406088B9028F66fA . Performed by the liquidator bot https://github.com/unitprotocol/liquidator .
approve USDP to Vault
buyout on LiquidationAuction02
CDP information can be accessed in Vault contract