Chymia
  • What is Chymia
  • ELI5: Activities on Chymia
  • Protocol Concepts
    • Connecting Web3 Wallets to Chymia
    • Depositing Collateral and Minting cUSD
      • Vault
      • Individual Vault Collateral Ratio (ICR)
      • Minimum Collateral Ratio (MCR)
      • Loan Duration
      • Liquidation Reserve
    • Using cUSD
      • Stability Pool
        • Acquiring Liquidated Collateral at a Discount
      • Redemption
    • Repaying cUSD Debt
    • Peg Maintenance
    • Liquidations
      • Liquidator
      • Claiming Liquidated Collateral
      • Liquidation Penalty
      • Underfunded Stability Pool
    • Recovery Mode
      • Impact on Fees
      • Impact on Liquidations
    • Fees
      • Minting Fees
      • Redemption Fees
      • Non-Redemption Fees
      • Interest Fees on Debt
    • Supported Collateral
  • Governance
    • Protocol Governance
    • Earning CHY
    • Emissions
    • Locking
    • Voting
    • Boosting Emissions
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  1. Protocol Concepts
  2. Depositing Collateral and Minting cUSD

Liquidation Reserve

When a user mints cUSD and opens a vault, 20 cUSD is automatically held by the protocol as a liquidation reserve.

The liquidation reserve:

  • Covers the cost of gas that will be incurred by the liquidator should the vault get liquidated.

  • Is considered part of the vault’s debt position and is included in the calculation of collateral ratios and interest payments.

  • Can be refunded fully, but only when the vault is closed through the repayment of debt, or by a redemption. If the vault is liquidated, the liquidation reserve will accrue to the liquidator.

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Last updated 1 year ago