🛡️Stability Pool and Liquidations

What is the Stability Pool (SP)?

The Stability Pool (SP) serves as a crucial mechanism within the Satoshi Protocol, designed to preserve the system's stability by providing liquidity for settling debts from liquidated Positions. When a Position undergoes liquidation, the SP uses SAT to clear the debt and, in return, acquires the collateral from the liquidated Position.

Why Contribute SAT to the Stability Pool?

Contributions to the SP are incentivized through several mechanisms:

• Collateral Gains: Contributors receive discounted collateral from the liquidation of Positions.

• Trigger reward: For the one who triggers the liquidation, he/she will receive 0.25% of the collateral and 2 SAT gas compensation as the reward.

• Token Rewards: Participation is rewarded with OSHI tokens.

• Revenue Sharing: By vesting OSHI tokens, participants gain access to the entirety of the protocol's revenue.

Liquidation Mechanics

Liquidations play a critical role for ensuring that the supply of SAT remains fully backed by collateral. Positions at risk of undercollateralization, specifically those falling below the 110% threshold, are subject to liquidation, thereby preserving the stablecoin's value and the protocol's overall stability.

Liquidation Process and Incentives

Initiating a Position's liquidation is open to anyone once its collateral ratio dips below 110%. To incentivize this process, a reward of 0.25% collateral and 2 SAT as gas compensation is provided.

Advantages for SP Contributors Post-Liquidation

SP contributors benefit directly from liquidations, which typically occur just below the 110% collateral threshold. This system allows contributors to gain a proportional share of the liquidated collateral, which is usually in the discounted price.

Withdrawal Policies

Withdrawals from the SP are generally unrestricted but can be temporarily paused in the event of pending Position liquidations. This measure ensures that the SP maintains sufficient liquidity to promptly address undercollateralized Positions.

What oracle are you using to determine the price of BTC?

The protocol uses the DIA's BTC:USD price feed.

Potential Risks

Contributors should be aware of the potential risks, such as losses stemming from liquidations executed at sub-optimal collateral ratios or from discrepancies in the SAT-to-collateral value.

Protocol for an Empty Stability Pool

In scenarios where the SP is depleted, the Satoshi Protocol employs a redistribution approach. This method proportionally divides both the debt and collateral from liquidated Position among the remaining Positions, thereby upholding the system's overall stability and solvency.