RUJI Liquidations
RUJI Liquidations is the world’s first public marketplace for bidding on at-risk collateral, enabling users to liquidate assets across the THORChain App Layer with ease - no bots, no code. By participating in a Dutch auction, users can acquire liquidated collateral at up to a 30% discount while protecting the solvency of Rujira protocols.
Key Features
Liquidations Marketplace: A public marketplace for purchasing liquidated collateral at a discount through Dutch auctions with instant settlement. Under the hood, every liquidated collateral is sold via a market order on RUJI Trade orderbook DEX, and RUJI Liquidations provides a user-friendly interface allowing anyone to catch the wick by placing Tracking Orders at a discount to market price.
Queue-Based System: Liquidations are not prioritized by speed but rather by the discount rate, filling bids from the smallest discount to the biggest. This helps to find an optimal discount rate and prevents immediate selling and damage to the market by MEV bot operators.
Ecosystem Solvency: Secure the Rujira ecosystem solvency for all leveraged products, including loans on RUJI Lending, and debt used for spot margin trading and leveraged market making.
Yield Bearing Token support (pending): For better capital efficiency, users can bid on liquidations using yield bearing tokens such as tokens deposited on Lending, earning yield while waiting for bids to fill (feature powered by AutoRujira).
Analytics (pending): Liquidation analytics are available across all RUJI Liquidations markets, enabling users to craft bidding strategies driven by concrete market insights.
Benefits
Mitigate Flaws in Standard Liquidation Mechanisms: The typical liquidation mechanism for DeFi protocols functions on a first-come-first-served basis and at a fixed liquidation discount. Consequently, liquidations are based on the speed of execution, leaving this market to a few highly efficient, well-capitalized MEV bots that preclude most users from participating. The fixed discount also results in liquidations often costing more to borrowers than they would in an efficient market. RUJI Liquidations changes this.
Democratizes Access to Liquidations: The RUJI Liquidations system revolutionizes DeFi liquidations by allowing anyone to bid on discounted collateral. Users place bids (tracking orders at a discount to oracle price) and bids at smaller discounts take priority, creating a fair system that discourages arbitrage and market dumping.
Reduces Cost of Liquidation for Borrowers: RUJI Liquidations creates a competitive market for liquidations and encourages bidders to reduce their bid discount in order to increase their chances of capturing the liquidated collateral, which results in a less costly liquidation process for borrowers. RUJI Liquidations (f.k.a. ORCA) had a TVL of $200m+ at its peak, prior to Terra Classic's collapse, that was being used to liquidate collateral on Anchor protocol with most of the liquidations happening within the 2-5% range.
Buy Assets at the Local Bottom: RUJI Liquidations effectively enables users to buy local bottoms and sell local tops in their favorite assets. Even at a 0% discount, it’s a compelling opportunity.
Reduces Market Volatility to the Downside: Most liquidation bots are arbitrage bots, they buy discounted liquidated collateral and sell it at market price within the same block, pocketing the liquidation discount in a risk-free transaction. This behavior leads to liquidation cascades, a feedback loop where selling pressure from the bots pushes prices further down, triggering more liquidations, which causes more sell pressure, and so on. RUJI Liquidations mitigates this immediate selling and damage to the market by MEV bots.
Fees & Fee Sharing with THORChain Base Layer
RUJI Liquidations charges two type of fees:
Liquidation fee: 1.0% taken on the repaid debt.
Liquidator fee: 0.5% taken on the repaid debt.
The standard 50/50 revenue share with TC Base Layer applies to the Liquidation fees collected by RUJI Liquidations.
The Liquidator fees are going to whoever triggers the liquidation first, incentivising off-chain solvers to find the liquidation routes that would often be impractical or impossible to calculate on-chain, whilst still internalising the liquidation volume across the Rujira Ecosystem.
Status
Not live yet.
Last updated