Tank and Liquidations

What's the Tank?

  • The Tank maintains system solvency by acting as a source of liquidity for liquidated debt.

  • When a Bottle is liquidated, the Tank burns BUCK to repay the debt, receiving the Bottle's collateral in return.

  • Users can fund the Tank by transferring BUCK into it (as Tank Contributors).

Why deposit BUCK to the Tank?

  • Tank Contributors receive gains in SUI from Bottle liquidations and rewards in the form of BKT tokens.

  • Staked BKT tokens earn a portion of system revenue.

What are Liquidations?

  • Liquidations ensure the stablecoin supply remains fully backed by collateral.

  • If a Bottle falls under the minimum collateral ratio of 110%, it gets liquidated.

  • The Tank absorbs the Bottle's debt, and its collateral is shared among Tank Contributors.

Who can liquidate Bottles?

  • Anyone can liquidate a Bottle when it drops below a 110% collateral ratio.

  • The initiator earns 0.25% of the Bottle's collateral as a reward.

How do Tank Contributors benefit from Liquidations?

  • Tank Contributors gain a net profit from liquidations as these happen below a 110% collateral ratio.

  • Contributors receive a portion of the liquidated collateral proportional to their share in the Tank.

Withdrawal Terms

  • Deposits can be withdrawn at any time unless there are liquidatable Bottles below a 110% collateral ratio.

  • When a bottle qualifies for liquidation but has not yet been liquidated, Tank will temporarily halt withdrawals (while still allowing deposits).

  • Longer deposit lockups can earn higher APR.

Risk of Loss

  • Losses can occur if a Bottle gets liquidated below a 100% collateral ratio due to a flash crash or oracle failure.

  • Losses are also possible if BUCK trades above $1 worth of SUI value.

Empty Tank Scenario - 1

  • Liquidation bot written by developers can do this strategy through PTB(programmable transaction block) 1. Flash loan/mint BUCK 2. Deposit BUCK in tank 3. Trigger liquidation function 4. Receive cheaper collateral 5. Swap collateral to BUCK on DEX 6. Repay flash loan/mint The risk for this strategy is that the DEX liquidity for collateral, so we set the debt ceiling for each collateral depending on their liquidity on DEX.

Empty Tank Scenario - 2

  • If the Tank is empty, the system uses redistribution, proportionally sharing the debt and collateral from liquidated Bottles with other existing Bottles. Please take a look at whitepaper page 16.

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