Liquidations & Stability Pool

Stability Pools

Stability Pools are used to liquidate undercollateralized Troves ensuring the solvency of Ebisu Money. They are a sources of liquidity repay debt from liquidated troves. When a Trove is liquidated, an equal amount of debt in ebUSD is burned from a Stability Pool to repay the users debt. In exchange, all of the users collateral is transferred from the Trove to the Stability Pool.

Stability Pool Depositor Benefits

Because Troves are liquidated just below 120% CR, Stability Pool depositors get more dollar value in collateral than their burned ebUSD deposits.

Stability pool liquidity is sourced from users who deposit ebUSD in exchange for yield from interest rate revenue and liquidated collatreral. There is one Stability Pool per supported LRT collateral.

Liquidations

To ensure the supply of ebUSD is fully backed by collateral, Troves that fall below the MCR are subject to liquidation.

Debt from liquidated Troves is canceled;, an equivalent of debt is burned from the Stability Pool, and the Trove's collateral is distributed to Stability Pool providers.

The user is left with their borrowed ebUSD, but no longer owns their inital collateral.

Who Liquidates Troves?

Anyone can liquidate a Trove when it drops below the MCR. The liquidator gets a compensation of 200 ebUSD + 0.5% of the Trove's collateral as reward.