Liquidations

Liquidations trigger either when:

• Collateral falls below liquidation LTV, or

• Borrower fails to refinance before the term ends

Liquidation uses an exponentially decaying Dutch auction, selling collateral into Splash pools (ADA/X or OADA/X).

Example (SNEK):

• Starts at oracle price

• Decays 3% every 10 minutes

• Expected clearing: first ~6 steps (≈1 hour)

• Full liquidation window: 24 hours

The design assumes:

• High value collateral

• Liquid enough markets

• Predictable decay promotes arbitrage participation

• LTVs chosen so the system is still solvent after moderate drops