![]() After all, no one wants to lose 10% of their position and getting liquidated can be stressful. Avoiding LiquidationsĪs a Trove owner, avoiding liquidation is likely going to be your number one priority. With both of those collateral ratio requirements in mind, let’s go over some ways to try to avoid liquidation. Note: Troves can be liquidated out of order, meaning high value Troves may be liquidated before riskier, lower value Troves. When the system is in Recovery Mode, the liquidation rules change, and Troves with a collateral ratio of 150% or lower are eligible for liquidation. the Dollar value of the entire system collateral at the current ETH:USD price, to the entire system debt) of the system goes below 150%. Recovery Mode is “activated” when the Total Collateral Ratio (i.e. Under Recovery Mode the rules are different. In the event you’re liquidated, you’ll still keep your borrowed LUSD, but your Trove will be closed. your ETH collateral will be forfeited and distributed to Stability Pool depositors. This means that if your collateral ratio drops below 110%, your Trove will be liquidated - i.e. Under normal operation, a 110% collateral ratio is the minimum required by Liquity. LUSD’s price is not relevant for calculating your collateral ratio. If ETH price goes up, your collateral ratio goes up and vice versa. Note: As the price of ETH fluctuates, so does your collateral ratio. ![]()
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December 2022
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