Liquidation

Liquidation

Minters whose collateral rate falls below Minimum Collateral Rate(150%) must be liquidated to ensure that the $LSDD stablecoin is fully backed by collateral assets.

During liquidation, the minter's debt is reduced, and liquidators receive the collateral asset in exchange for paying off the debt.

After liquidation, the minter's reduced debt is paid off, and the value of the remaining collateral equals 110% of the reduced debt.

Liquidators

Liquidators are the first line of defense in preserving system viability. By becoming a liquidator, users can use their $LSDD to settle any minters' debts at any time, maintaining the stability of $LSDD and the total supply of $LSDD. Liquidators are rewarded when liquidation proceeds.

When a minter is being liquidated, $LSDD corresponding to up to 50% of the minter's remaining debt is burned from the liquidator's balance to settle the debt. In return, the liquidator receives the collateral asset worth 109% of the value of the repaid $LSDD, and at least 0.5% of the collateral asset goes to the Keeper.

Keepers

Any third party can operate a Keeper Program to monitor the state of each liquidator and minter on the LSDD protocol.

When a borrower needs to be liquidated, the Keeper can choose to do so immediately using $LSDD supplied by the appropriate liquidator in exchange for 1% of the liquidated assets.