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Trident Network
  • Trident Network
    • Mission and Vision
    • Core Values
  • Network Specifications
    • Overview
    • General Information
      • DPoS
      • Validators
  • Programmable Money
    • Introduction
    • DGEL
      • Collateralization
      • Safeguards
        • Decentralised Auctions
        • Automatic Liquidations
    • Pegged Assets
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  • Immediate Triggering of Automatic Liquidations:
  • Efficient Conversion of Collateralized Assets:
  • Repurchasing DGEL from the Market
  • Preservation of User Trust and Confidence
  • Transparency and Accountability
  1. Programmable Money
  2. DGEL
  3. Safeguards

Automatic Liquidations

Automatic liquidations within the Trident Network ecosystem serve as a fail-safe mechanism, ensuring the stability and integrity of DGEL even in the face of extreme market fluctuations. When the market price of underlying assets experiences a dramatic drop or auctions fail to restore the Collateralization Ratio, automatic liquidations come into play as a decisive response to swiftly restore balance.

Immediate Triggering of Automatic Liquidations:

Automatic liquidations are triggered automatically and immediately when the Collateralization Ratio falls below the specified threshold. This rapid response mechanism ensures that any potential risks to DGEL’s stability are swiftly addressed, preventing the stablecoin from deviating significantly from its peg to the Georgian Lari (GEL). By initiating automatic liquidations, Trident Network proactively mitigates under-collateralization, a scenario that could undermine the stability and trust in DGEL.

Efficient Conversion of Collateralized Assets:

Upon triggering, the system efficiently converts a portion of the collateralized assets into DGEL tokens. This conversion process is designed to be seamless and precise, ensuring that the collateralized assets are swiftly transformed into DGEL at market rates. By converting assets into DGEL, the system bolsters the demand for DGEL in the market, effectively reducing its supply. This reduction in supply counteracts any excess liquidity, preventing an imbalance between supply and demand and contributing to the stabilization of DGEL’s value.

Repurchasing DGEL from the Market

The DGEL tokens obtained from the automatic liquidation process are immediately utilized to repurchase DGEL from the market. This repurchasing action serves multiple purposes. Firstly, it reduces the circulating supply of DGEL, aligning it with the reduced collateralized assets. Secondly, it exerts upward pressure on DGEL’s price, helping to restore the stablecoin’s value. Additionally, this repurchasing action has the effect of absorbing excess tokens from the market, further contributing to the stability of DGEL’s price.

Preservation of User Trust and Confidence

The seamless execution of automatic liquidations is crucial not only for the stability of DGEL but also for preserving user trust and confidence. In the face of market turmoil, users need assurance that the stablecoin they hold remains resilient and trustworthy. By swiftly and effectively responding to market volatility, Trident Network demonstrates its commitment to user security and the stability of DGEL, reinforcing confidence within the community.

Transparency and Accountability

Transparency and accountability are integral to the automatic liquidation process. Trident Network provides real-time data and insights into the liquidation events, ensuring that users are informed about the measures taken to safeguard DGEL’s stability. By promoting transparency, Trident Network fosters an environment of trust, where users can rely on the platform's integrity and responsiveness, even in challenging market conditions.

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Last updated 1 year ago