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#USP101 🔔 How does $USP #liquidation work?
Positions with a health rate lower than 1 are open to discounted collateral liquidation to prevent under-collateralization & protocol insolvency.
We use the dutch auction format, and portions can be filled partially. 🧵
Positions with a health rate lower than 1 are open to discounted collateral liquidation to prevent under-collateralization & protocol insolvency.
We use the dutch auction format, and portions can be filled partially. 🧵
2/ Anyone can trigger a smart contract check of all position health rates. If health rates are below 1, the auction process will be kickstarted. The kickstarter will receive a reward to compensate for their incurred gas fees and efforts.
3/ The contract asks the oracle for the collateral's price and it then calculates the collateral value.
Calculate the auction Starting price by multiplying the collateral value by (1+Buffer). If the buffer is 0, the auction Starting price would equal the collateral value.
Calculate the auction Starting price by multiplying the collateral value by (1+Buffer). If the buffer is 0, the auction Starting price would equal the collateral value.
