Liquidations

Description

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.

To participate in manual asset liquidation:

Technical information:

  • Liquidation trigger:

  • Buyout collateral:

  • approve USDP to Vault 0xb1cFF81b9305166ff1EFc49A129ad2AfCd7BCf19

  • Call buyout on LiquidationAuction02 0xaEF1ed4C492BF4C57221bE0706def67813D79955

  • CDP information can be accessed in Vault contract 0xb1cFF81b9305166ff1EFc49A129ad2AfCd7BCf19. getTotalDebt etc.