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Platform Mechanisms Affecting Balances

A lot of effort was put into making the features of the platform understandable for everyday users. However, some specific aspects may need additional explanations, as from a user's perspective, the behaviour may not be as expected.

Below is a short list of mechanisms which have previously caused questions.

Step In / Liquidation#

Both outstanding youves tracker tokens and locked collateral in my vault are lower than before.

The user's collateral in a vault is exposed to the risk of loss. In case the collateral ration drops to the emergency collateral ratio, the step in mechanism / liquidation of the collateral management can be activated by another user. This user can post and immediately burn youves tracker tokens in the vault and gets a bonus out of the excess collateral of the vault.

Example#

An example can be found in the collateral management example.

Bailout / Minter Conversion Right#

uUSD disappearing from the savings pool.

The user conversion rights can trigger an involuntary exchange of digital assets. In the case of the bailout / minter conversion right a minter can buy back and immediately burn youves tracker tokens staked in the savings pool / minter conversion pool in exchange for locked collateral at an implied rate of 1.25 * target price.

Example#

An example can be found in the bailout / minter conversion right.

Holder Conversion Right#

Both outstanding youves tracker tokens and locked collateral in my vault are lower than before.

For uDEFI the holder conversion right only affects those vaults which have opted-in of the conversion feature. The user conversion rights can trigger an involuntary exchange of digital assets. In the case of the holder conversion right, a holder of youves tracker tokens can exchange them against locked collateral from a vault at an implied rate of 0.9375 * target price. The youves tracker tokens are immediately burned in the vault and the tez are taken out of the released collateral.

Example#

An example can be found in the holder conversion right.

Stability Mechanism#

This is not yet in use.