Liquidation LTV and Fee
In Kurrency, Liquidation LTV and Liquidation Fee are set for each collateral type based on stability of the collateral.
| Collateral Type | 1st Liquidation LTV | 2nd Liquidation LTV |
|---|---|---|
WEMIX | 60% | 63.2% |
stWEMIX | 60% | 63.2% |
WEMIX$ | 90% | 94.7% |
LTV is the ratio of Outstanding Debt(minted WCD + accrued Stability Fee) to value of collateral. If the ratio exceeds Liquidation LTV, Liquidation may be triggered. Liquidation LTV is categorized into 1st and 2nd. Most Liquidation will occur within 1st Liquidation LTV, but in the case that collateral depreciates rapidly, 2nd Liquidation LTV may be exceeded.
When LTV exceeds 1st Liquidation LTV, Liquidator may proxy repay up to 50% of outstanding debt. However, if 2nd Liquidation LTV is exceeded, Liquidator can proxy repay up to 100% of outstanding debt.
| Collateral Type | Liquidation Fee |
|---|---|
WEMIX | 10% |
stWEMIX | 10% |
WEMIX$ | 6% |
When Liquidation occurs, Liquidator proxy repays some or all of user’s outstanding debt. However, the user will lose collateral worth slightly more than proxy repaid WCD, because the Liquidator has taken certain risks(such as depreciation of collateral, slippage and gas costs).
Example : Calculating Liquidation Fee
User A mints 1,000 WCD with WEMIX as collateral.
Due to depreciation of collateral(WEMIX), User A’s LTV exceeds Liquidation LTV.
Liquidator proxy repays 500 WCD on behalf of User A(User A’s outstanding debt reduced to 500 WCD)
550 USD worth of User A’s collateral(WEMIX) is liquidated, among which 50 USD is Liquidation Fee.
Last updated