Vault liquidation

Target, receiver, and keeper

The target owns an underbacked position. The receiver accepts its commitment and must back the resulting position at the receiver's chosen health target. A keeper can be the receiver and earn the REP award. There is no separate ETH execution reserve or protocol-funded gas reimbursement.

When a position is liquidatable

All free and committed REP deposited for the owner in this portfolio universe counts toward its backing. Earned REP income is separate. The owner's voluntary health target controls new exposure and surplus withdrawals; merely falling below that buffer does not trigger liquidation.

The protocol compares backing with the commitment's required REP at the shared oracle's liquidation price, using the protective edge of its error band. Admission uses the opposite, conservative edge. An accepted adverse observation starts the takeover clock automatically. The award grows according to the indexed takeover rules, without a keeper transaction to start the clock.

Cure before takeover

The owner can deposit REP or reduce commitment. Removing unbacked commitment uses spare capacity above demand, so a cure cannot erase outstanding trader claims. A takeover first performs the available cure, then quotes the remaining obligation and award. The receiver supplies any missing backing. Minimum commitment and award bounds prevent involuntary dust execution, and caller limits constrain the REP the receiver contributes.

Existing earned fees remain with their owner. Underbacked commitment stops earning new fees. Principal, fees, and reporter claims use separate accounting. See portfolio capital and retirement for exits and the liquidation reference for exact contract bounds.

Receiver consent

The receiver calls the capital ledger directly. Bounded takeover calls pin the accepted price epoch, target health, source cohort, maximum resulting principal and commitment, minimum REP award, and maximum own REP contribution.

Execution and incentives

Quotes are checked against live state in the transaction. A stale quote or insufficient backing reverts atomically. Keepers maintain their own indexes and choose profitable targets; no onchain scan of all owners is required. A small or illiquid REP award may not attract a keeper, so liquidation liveness depends on economically viable participation.

Fork isolation

Positions belong to one portfolio and universe. A fork stops ordinary parent operations. Each owner chooses a branch during the shared choice window; the receiver in a child must authorize its own child-universe exposure. See shared fork choices.