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 a user-friendly interface and instant settlement.

• 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.

• Anti-Bot Approach: To prevent front-running by bots, there is a 10-minute activation delay between the moment a bid is placed and the moment it can be activated. If there are not enough bids in the queue relative to the amount of at-risk collateral to be liquidated, the activation delay is voided, allowing arbitrage bots to preserve the system solvency.

• 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: For better capital efficiency, users can bid on liquidations using yield bearing tokens (tokens deposited on Lending), earning yield while waiting for bids to fill.

• Analytics: Basic liquidation analytics are available across all RUJI Liquidations markets, with more advanced analytics planned.

• Third Party Integration: RUJI Liquidations can be integrated into third party money markets and other leveraged dApps for both EVM and RUST-based projects. If you are interested in providing your community with fair access to liquidations while reducing the cost of being liquidated for your users, reach out to the Rujira team.

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 liquidated borrowers than they would in an efficient market. RUJI Liquidations changes this.

• Democratizes Access to Liquidations: The RUJI Liquidations queue revolutionizes DeFi liquidations by allowing anyone to bid on discounted collateral. Users place bids 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 at-risk 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.

  • Withdrawal fee: 0.5% taken on the liquidated collateral.

• The standard 50/50 revenue share with TC Base Layer applies to all the fees collected by RUJI Liquidations.