110%
collateral ratios, it is expected that Stability Providers will receive a greater dollar-value of collateral relative to the debt they pay off.110%
will be closed/liquidated.~10%
value overall hence it is critical to always keep the ratio above 110%
, ideally above 150%
.110%
. The initiator receives a gas compensation (Liquidation Reserve + 0.5%
of the Trove's collateral) as reward for this service.gas compensation = liquidation reserve + 0.5% of Trove's collateral
400
XIM is funded by Liquidation Reserve while the variable 0.5%
part (in $ETH) comes from the liquidated collateral, slightly reducing the liquidation gain for Stability Providers. 110%
, you will most likely experience a net gain whenever a Trove is liquidated. 110%
that have not been liquidated yet. 100%
most of the time, it is theoretically possible that a Trove gets liquidated below 100%
in a flash crash or due to an oracle failure. In such a case, you may experience a loss since the collateral gain will be smaller than the reduction of your deposit. $1
, liquidations may become unprofitable for Stability Providers even at collateral ratios higher than 100%
. However, this loss is hypothetical since XIM is expected to return to the peg, so the “loss” only materializes if you had withdrawn your deposit and sold the XIM at a price above $1
.