Manna

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Liquidations ​

Liquidations keep the Manna protocol solvent by closing under-collateralized Troves before they can accumulate bad debt.

When Does Liquidation Happen? ​

A Trove is liquidated when its collateral ratio drops below 125% (or below the TCR during Recovery Mode).

This typically happens when the price of SOL drops, reducing the value of the Trove's collateral relative to its debt.

How Liquidation Works ​

  1. A Trove's CR falls below 125%
  2. Anyone can trigger the liquidation (it's permissionless)
  3. The Stability Pool absorbs the Trove's debt
  4. The Stability Pool receives the Trove's collateral at a ~10% discount
  5. The Trove is closed

Example: A Trove has $1,000 of collateral and $950 of debt (CR ≈ 105%). Upon liquidation:

  • Stability Pool absorbs $950 of debt
  • Stability Pool receives $1,000 of collateral
  • Net gain for Stability Pool depositors: ~$50 (the ~5% surplus in this case)

Redistribution (Fallback) ​

If the Stability Pool is depleted (not enough solUSD to absorb the debt):

  • The liquidated Trove's debt and collateral are redistributed proportionally to all remaining active Troves
  • This means other borrowers absorb a share of the debt but also receive a share of the collateral
  • Redistribution is a last resort — the Stability Pool handles the vast majority of liquidations

How to Avoid Liquidation ​

  • Maintain a CR of 150% or higher — this gives you a significant buffer against price drops
  • Monitor SOL price — your CR changes as the SOL price moves
  • Add collateral when your CR approaches the danger zone
  • Repay debt to increase your CR without adding collateral

Liquidation During Recovery Mode ​

During Recovery Mode (system TCR < 150%), the liquidation threshold is raised. Troves with a CR below the TCR (not just below 125%) can be liquidated. This accelerates the restoration of the system's health.