💥#Example of Full Liquidation on Aqua Protocol
Triggering Liquidation: When the overall liquidation mode is activated.
Initial Setup:
• TON Value: 1 TON = $2.14
• Alice's Deposit: 1,000 TON, valued at about $2,140
• Minted AquaUSD: Alice mints 1,050 AquaUSD
• Initial Collateral Ratio (CR): ~203.81% (calculated as ($2,140 / $1,050) * 100%)
🔻Price Drop:
• New TON Price: Falls to $1.30
• Time Open: Position has been open for one year
• Accrued Borrowing Rate: 0.5% per year
• Borrowing Fee: Alice owes 5.25 AquaUSD for borrowing
Updated Values:
• Updated Collateral Value: 1,000 TON is now worth $1,300 (1,000 * $1.30)
• Updated CR: ~123% (calculated as ($1,300 / (1,050 AquaUSD + 5.25 AquaUSD)) * 100%)
⚖️Liquidation Calculation:
• Since CR < 125%, Alice’s position is eligible for full liquidation, allowing 1,050 AquaUSD to be liquidated.
🔄Liquidation Process:
• Bob's Action: Bob fully liquidates Alice’s position by repaying 1,050 AquaUSD.
• Borrowing Fees: 0.5% of 1,050 AquaUSD equals 4 TON ($5.25), paid to the Aqua Protocol treasury.
• Repayment Fee: Since the amount is over $1,000, a 0.5% fee applies, which is another 4 TON ($5.25), also paid to the treasury.
• Keeper Fee: Cathy, the Keeper, earns a 3% fee, totaling 24 TON ($31.50).
• Liquidator Fee: Bob receives the remaining collateral, totaling 968 TON (1,000 - 4 - 4 - 24), worth $1,258—a profit of 19.8%.
📊Post-Liquidation Status:
• Alice's Remaining Debt: Fully cleared to 0 AquaUSD
• Remaining Collateral: Fully liquidated to 0 TON
As a result, Bob earns a 19.8% premium for successfully executing the liquidation, with 3% of the reward going to the Keeper.
By participating in Aqua Protocol as a liquidator, redemption provider, or Keeper, you can help maintain the stability of AquaUSD and protect the system. Always remember the importance of a healthy collateral ratio to reduce the risk of liquidation and maximize rewards within the protocol!
💡#Example of Partial Liquidation on Aqua Protocol
Initial Setup:
• Value of TON: 1 TON = $2.14
• Alice's Deposit: 1,000 TON, worth about $2,140
• Minted AquaUSD: Alice mints 1,050 AquaUSD
• Initial Collateral Ratio (CR): ~203.81% (calculated as ($2,140 / $1,050) * 100%)
🔻Price Drop:
• New TON Price: The price drops to $1.47
• Time Open: The position has been open for one year
• Accrued Borrowing Rate: 0.5% per year
• Borrowing Fee: Alice owes 5.25 AquaUSD for borrowing
Updated Values:
• New Collateral Value: 1,000 TON is now worth $1,470 (1,000 * $1.47)
• Updated CR: ~139% (calculated as ($1,470 / (1,050 AquaUSD + 5.25 AquaUSD)) * 100%)
⚖️Liquidation Calculation:
• Maximum Liquidation Amount: The system allows up to $645 of Alice’s AquaUSD to be liquidated to maintain a safe collateral ratio.
🔄Liquidation Process:
• Bob's Action: Bob repays 645 AquaUSD to partially liquidate Alice’s position.
• Collateral Received by Bob: He gets $703 back, equivalent to about 478 TON (645 AquaUSD * 1.09).
• Keeper’s Reward (Cathy): Cathy earns $19.35 for assisting with the liquidation (3% of 645 AquaUSD).
📊Post-Liquidation Status:
• Alice's Remaining Debt: After the liquidation, Alice owes 405 AquaUSD (1,050 - 645).
• Repayment Fee: Alice pays a 0.5% fee on the 645 AquaUSD, totaling 3.26 AquaUSD.
• Total Fees Charged: Including borrowing fees, Alice pays back a total of approximately 5.8 TON.
• Remaining Collateral: Alice has 503.2 TON left after the liquidation (1,000 - 5.8 - 478 - 13 TON).
• Updated CR: Her new collateral ratio is about 183% (calculated as ($740 / 405 AquaUSD) * 100%).
This example illustrates the Aqua Protocol’s partial liquidation process, helping maintain a safe collateral ratio during market fluctuations. Keeping a healthy CR minimizes liquidation risks and maximizes your collateral protection.
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