CDP

Purpose: Borrowing against collateral with risk parameters and liquidation.

Functional summary:

  • Mint/burn USDST against supported collateral with per‑asset risk params.

  • Liquidate unhealthy vaults via direct seize with penalty and close factor.

  • Realize and resolve bad debt; junior note mechanism repays from reserves.

Key contracts:

  • CDPEngine.sol: Core debt accounting, interest, and liquidation mechanics.

  • CDPRegistry.sol: Registry of system addresses/configuration.

  • CDPReserve.sol: Protocol reserve management for CDP.

  • CDPVault.sol: Asset custody for collateral and debt settlement.

Core flows:

  • Open: Lock collateral → mint debt asset per LTV.

  • Accrue: Interest via index; debt grows over time.

  • Repay: Burn debt asset to reduce obligation; release collateral.

  • Liquidate: If health < threshold, liquidator repays and seizes collateral with bonus.

Accrual and units:

  • Per‑asset index rateAccumulator (RAY, 1e27). Debt reads use scaledDebt * rateAccumulator / RAY.

  • _rpow computes discrete compounding; accumulator never falls below RAY.

  • unitScale maps collateral token units to 1e18 when valuing in USD.

Formulas:

  • Debt (USD, 18d): debtUSD = scaledDebt × rateAccumulator / 1e27.

  • Collateral value (USD): collateralUSD = collateralAmount × price / unitScale.

  • Collateralization ratio: CR = collateralUSD × 1e18 / debtUSD.

  • Max mint (mintMax headroom): maxUSD = collateralUSD × 1e18 / liquidationRatio − currentDebtUSD − 1 (wei safety).

  • Liquidation caps: closeFactorCap = totalDebtUSD × closeFactorBps / 10000.

  • Coverage cap including penalty: coverageCap = collateralUSD × 10000 / (10000 + penaltyBps).

  • Exact burn on liquidate: owedForDelta = scaledDelta × rateAccumulator / 1e27 (burn this USDST amount).

  • Penalty USD: penaltyUSD = owedForDelta × penaltyBps / 10000.

  • Collateral to seize: seize = ( (owedForDelta + penaltyUSD) × unitScale ) / priceColl.

  • Junior index bump: deltaIndex = deltaReserveUSDST × 1e27 / totalJuniorOutstandingUSDST.

  • Junior entitlement: ent = min( capUSDST, capUSDST × (effectiveIndex − entryIndex) / 1e27 ).

Liquidation (direct seize, no auction):

  • Caps the repay by: totalDebt, closeFactorBps, and coverage INCLUDING penalty:

    • coverageCap = collateralUSD * 10000 / (10000 + liquidationPenaltyBps)

  • Burns EXACT extinguished USD: owedForDelta = scaledToLiquidate * rateAccumulator / RAY.

  • Routes fee portion (owedForDelta − principal) between CDPReserve and FeeCollector via _routeFees (split by feeToReserveBps).

  • Seizes collateral for (repay + penalty) at oracle price; clamps to borrower collateral.

  • Dust handling: if remaining collateral ≤ threshold, it is seized; if no collateral remains and debt > 1 wei, records bad debt (see below).

Bad debt lifecycle (per‑asset):

  • Realization: when a vault has zero collateral after liquidation and non‑trivial debt remains, the residual is removed from books and added to badDebtUSDST[asset]. Event: BadDebtRealized(asset, borrower, amount).

  • Repayment via juniors: openJuniorNote(asset, amount) burns caller’s USDST to reduce bad debt (clamped to remaining). A junior note is created with cap = principal × (1 + premiumBps).

  • Reserve indexing: new USDST appearing in CDPReserve increments a global juniorIndex (RAY). Entitlements per note are proportional to cap and index growth; capped at remaining cap.

  • Claim: claimJunior() pays from CDPReserve up to entitlement; reduces note cap and adjusts entry index to preserve unpaid accrual.

Fees and reserves:

  • _routeFees(asset, feeUSD): mints USDST fees and splits between CDPReserve and FeeCollector by feeToReserveBps. Event: FeesRouted.

Pause controls:

  • Per‑asset and global pause switches block actions when set.

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