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๐Ÿงต Collateral Debt Position (CDP)
๐Ÿงต Collateral Debt Position (CDP)

eBTC's borrowing process, CDPs and liquidations.

hyment avatar
Written by hyment
Updated over a week ago

Introducing Collateral Debt Positions (CDPs)

A Collateral Debt Position serves as the fundamental unit for tracking borrowed debt, corresponding collateral, and their ratio, known as the Individual Collateral Ratio (ICR). Each CDP is associated with a single Ethereum account, offering users the flexibility to create multiple CDPs for varied borrowing strategies, each with its distinct collateral ratios.

๐Ÿšจ Liquidation criteria.

The protocol assesses a CDP's liquidation eligibility based on its ICR. During Normal Mode, liquidation is triggered if the ICR falls below the Minimum Collateral Ratio (MCR); in Recovery Mode, it's based on the Total Collateral Ratio (TCR).

Maintaining a healthy ICR is paramount in eBTC's liquidation process, indicating the CDP's viability. A low ICR signals undercollateralization, prompting the initiation of liquidation to mitigate default risks.

In cases where the CDP's debt surpasses repayable amounts, liquidators may opt for partial liquidation. However, the CDP must retain more collateral than the minimum CDP size requirement of 2 stETH for partial liquidation to occur.

โ›ฝ๏ธ Gas stipend.

Additionally, a gas stipend of 0.2 stETH is mandated as additional collateral for opening a CDP, covering transaction gas costs. While not factored into collateral ratio calculations, this stipend is refunded upon full debt repayment. In the event of liquidation, the gas stipend is transferred to the liquidator as a compensation for transaction gas expenses.


โ“ If you find yourself in need of additional assistance along your eBTC journey, feel free to explore our Support Help Center or directly contact us. We're here to address any questions or concerns you may encounter within the eBTC ecosystem. Just click the chat button at the bottom right-hand corner of the screen and send our support team a message.

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