Avoiding Redemption

To avoid redemptions in the Liquid Loans protocol, it's important to maintain a healthy collateral ratio relative to the rest of the Vaults in the system. Here's a step-by-step guide to help you:

1. Understand Your Collateral Ratio

Your Individual Collateral Ratio (ICR) is the ratio of the dollar value of your entire PLS collateral to your USDL debt. 

2. Monitor the Debt In Front (DIF) Indicator

Use the Debt In Front indicator in the Liquid Loans dApp to gauge the USDL debt of all Vaults with a lower collateral ratio than yours.This gives an idea of your position's redemption risk; the lower the amount of USDL in front of your vault, the higher the risk.

3. Increase Collateral (if necessary)

Add more PLS to your Vault to increase your collateral and raise your ICR. This makes it less likely for your Vault to be redeemed against, as your collateral ratio will be higher than others.

4. Regularly Assess Market Conditions   

Stay informed about PLS price fluctuations, as price drops can affect your ICR. Adjust your collateral or debt accordingly to maintain a safe buffer.

5. Check Your Vault Activity Regularly

Regularly check your Vault’s status and make necessary adjustments. Being proactive can prevent sudden redemptions and help manage your portfolio better.

By following these steps, you can significantly reduce the chances of being redeemed against in the Liquid Loans protocol.