Liquidation

What happens past the threshold, and why the mechanism matters more than the number.

Spec: README Sections 26-28

A position becomes liquidatable when its LTV crosses the liquidation threshold for its collateral — 98% on Tier 1. Bad debt begins at 100%. The entire margin for error is the gap between those two, which is why the mechanism, not the threshold, is what makes high LTV viable.

Design

Property	Choice	Why
Who liquidates	Permissionless — anyone may call	No single keeper has to be fast enough alone
How much	Partial and incremental	A small breach costs a small amount
Against what	No onchain venue exists yet	Robinhood Chain has no DEX, so a liquidator is left holding the Stock Token
Pricing	Chainlink — 24h heartbeat, 0.5% deviation	Not low-latency; the permitted deviation alone consumes much of the margin

Under-collateralized Position
          ↓
      Liquidation
          ↓
   Collateral seized
          ↓
    Collateral sold
          ↓
    USDG recovered
          ↓
      Debt repaid

Insurance reserve

Protocol revenue funds a reserve that absorbs losses liquidation cannot fully recover — gaps, halts and thin books all produce shortfalls that a liquidator will not eat. It stands between a shortfall and the lenders; it cannot conjure money.