6A. Liquidation & Emergency Shutdown
coming soon...
Emergency shutdown is the last resort to protect Acala's stablecoin system against serious security threats. The shutdown is triggered via Acala governance. It will enforce target prices of assets, and ensure aUSD and loan owners receive the value of assets they entitled to.
The system is capable of partial shutdown loans for one or more selected collateral or a global shutdown. Hereafter we will detail the global Emergency Shutdown procedure. When a global Emergency Shutdown is triggered, the following would happen:
- Shutdown triggered: users are not allowed to update loan positions, the system will lock a target price for each asset, however users are free to withdraw any free collaterals i.e. collaterals that are yet to be used to borrow aUSD.
- Loan processing: the system will stop/clear all auction, process outstanding loans and debts, this may take some time, but ultimately a basket of collateral assets will be available for aUSD holders to reclaim
- Reclaim debts: upon step #2 completion, the system will return to the initial status of zero surplus and zero debt, users can burn their aUSD and reclaim equivalent value of collateral assets (which could be a mixture of renBTC, DOT etc). The mixture of collaterals returned will be determined by the system based on availability.
Step 1 Shutdown starts...
Users can withdraw their free collaterals i.e. collaterals that are not used/locked for aUSD loans. Other loan update operations are prohibited hereafter.
Step 2 Liquidation...
The system will clear all outstanding auction, loans and debts.
Step 3 Reclaim aUSD collaterals...
Upon Step 2 completion, aUSD holders and loan owners can burn aUSD to reclaim collateral assets.
