Recovery Mode

Recovery Mode kicks in when Total Collateral Ratio (TCR) of a collateral falls below a certain level. Anything above the TCR is considered healthy/normal.

  • TCR = total dollar value of the respective collateral / total dollar value of the corresponding debt

There is no global TCR for Orby. Instead, the ratio is calculated individually for each collateral type, resulting in varying TCR values for different collaterals.

For example, TCR for CDCETH is 150%, whereas it could be higher for another type of collateral. There may be a situation where TCR for CDCETH is in Recovery Mode, while another collateral is still in Normal (i.e. healthy) mode. In such a case:

  • CDCETH shuttles with a collateral ratio below 150% can be liquidated

  • The protocol blocks any borrower transactions related to CDCETH that would further decrease the TCR

    • When this happens and users wish to borrow further $USC backed by CDCETH, users can either adjust existing shuttles in a manner that reduces the collateral ratio or open a new shuttle with a collateral ratio above or equal to 150%

  • Borrowing costs for CDCETH are reduced to 0% to encourage new borrowing that meets the above criteria

  • On the other hand, there will be no impact on shuttles for the other collateral

In Recovery Mode, liquidation loss is capped at the respective collateral’s MCR. This means that liquidators can only pay off a shuttle’s debt up to the corresponding collateral ratio threshold. Any remainder, i.e. the collateral above MCR (but below the TCR), can be reclaimed by the liquidated borrower using the standard shuttle interface.

Let’s consider a scenario where a user has US$149 worth of collateral and US$100 worth of debt. In this situation, suppose that CDCETH has a TCR of 150%, and MCR of 135%, and the collateral is currently in Recovery Mode:

  • This user (with a CR of 149%) will be flagged for liquidation

  • The user’s US$100 worth of debt will be repaid

  • However, the US$135 worth of collateral will be transferred out of the shuttle and distributed between the liquidator and Stability Pool depositors

  • The liquidated user can then claim back the remaining US$15 worth of CDCETH collateral

The tables below will demonstrate the liquidation behaviours in various scenarios using the following nomenclature. (This table only considers CDCETH shuttles in isolation (i.e. TCR = 150%), but the logic also applies to other collateral types when introduced):

  • ICR = Individual Collateral Ratio for CDCETH shuttles

  • MCR = Minimum Collateral Ratio for CDCETH shuttles

  • TCR = Total Collateral Ratio for CDCETH shuttles

  • SP = Stability Pool

Commonly asked questions

What's the TLDR?
  • We aim for $USC to always be backed by more than a dollar's worth of collateral

    • Recovery Mode is a key risk management feature to ensure this

  • It is recommended to keep your shuttle's collateral ratio at 180% to lower the possibility of being liquidated

What is Normal Mode

When the TCR of $cdcETH is above 190%, the system is in Normal Mode. No impact to users.

What is Cautious Mode?

When the TCR of $cdcETH is between 150 - 190%, the system is in Cautious Mode. No impact to users - but we recommend maintaining your shuttle collateral ratio at at least 180%

What is Recovery Mode?

When the TCR of $cdcETH is below 150%, the system is in Recovery Mode. Any shuttles with collateral ratio below 150% will be liquidated

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