Liquidations

Borrowers (minters) whose collateral rate falls below 150% of the minimum collateral rate must be liquidated to ensure that the zUSD stablecoin is fully backed by collateral assets.

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

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

It is highly recommended to always maintain a healthy collateral rate above 150%, preferably above 200%.

Liquidators

Liquidators are the first line of defense in preserving system viability. By becoming a liquidator (which currently can only be run by 3rd parties/bots), users can use their eUSD to settle any borrowers' (minters') debts at any time, maintaining the stability of zUSD and the total supply of zUSD. Liquidators are rewarded when liquidation proceeds.

When a borrower (minter) is being liquidated, up to 50% of the borrower's collateral 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 zUSD, and at least 0.5% of the collateral asset goes to the Keeper.

How Do I Benefit as a Liquidator?

Users familiar with deploying 3rd party liquidation bots can perform a liquidation on borrowers (minters) earning a 10% liquidation reward.

You can also enable the liquidator feature, grant a third-party Keeper access to your funds, and allow them to carry out the liquidation process in exchange for a portion of the 10% liquidation reward (9% to the liquidator and 1% to the Keeper).

How to Become a Liquidator?

Currently, only users deploying 3rd-Party Liquidation Bots can become Liquidators.

Those familiar and experienced with this process can expect to earn an additional 9% arbitrage profit whenever your account's eUSD balance is automatically converted to more stETH (or other LST) through liquidation.

Note: Liquidation will only happen on the Hub Chain - Base.