Liquidation Process (TWAP)

Liquidation Process (TWAP)

When it Happens

If the 24-hour grace window expires without sufficient action, we liquidate to bring the position back within policy or to close it entirely.

Step-by-Step

Final Snapshot

• Timestamped view of obligations.

• Collateral value (haircut).

• Live caps.

Plan the Unwind

• Size a TWAP program.

• Keep market impact ≤ system cap.

Execution

1. Hedged Loans (USDT/USDC/BTC):

   • Unwind hedges in sync.

   • Sell enough 0FX collateral to settle obligations in the borrowed asset.

   Apply Fees & Costs

   • Liquidation Fee: Designed to cover modeled impact.

   • Execution Costs: Gas, swaps, hedge close.

   Waterfall (Proceeds Allocation)

   1. Execution & operational costs

   2. Net funding (if any) and accrued base APR

   3. Principal

   4. Residual value (surplus collateral) → returned to your receiving wallet

   Proof & Notifications

   You receive transaction hashes for collateral sales, hedge closes, and repayments. A closeout statement shows the waterfall and any residual returned.

   If Liquidity is Thin

   • Extend the TWAP schedule or partial-liquidate to the nearest safe LTV, then reassess.

   • If oracle divergence or venue constraints persist, liquidation may proceed in phases until back inside policy.

   What You Can Expect

   A process aimed at minimizing market impact, keeping the system inside its cumulative impact cap, and returning any excess value to you after obligations and fees.