The Collateral Surplus Pool (The LEAST Known Aspect of LL)

You might be asking, what happens when my vault gets redeemed?

And do I lose all of my PLS?

The answer is no.

And the extra PLS gets sent to the Collateral Surplus Pool.

What is a USDL Redemption?

Any USDL holder can redeem their tokens directly for PLS at face value (minus fees). 

When redeemed, USDL debt is canceled from the selected Vaults and PLS collateral is withdrawn to fulfill the request.

Vaults are redeemed in ascending order of collateralization ratio. A redemption sequence will fully redeem up to n-1 Vaults, and partially redeem 1 Vault.

Redemptions are blocked if TCR < 110% to prevent attackers crashing the system. Note redemptions are also disabled for the first 14 days after deployment.

What Happens If Your Vault is Redeemed Against

If your vault is redeemed against:

• You keep your loan (USDL)
• You lose the amount of PLS proportional to your debt
• Your debt is canceled out

The final event that happens is that your excess PLS is sent to the Collateral Surplus Pool, where you can claim it later.