Providing liquidity

Временный механизм для валюты DurovUSD с однотипным залогом

At the DurovUSD stage with homogeneous collateral, a liquidity contract acts as a liquidation mechanism: it is a smart contract to deal directly with TON users and custodians according to price quotes in the system.

When a collateralized debt obligation is liquidated, it is immediately purchased by the system (the client gives the wTON and the platform buys it). The owner of the collateralized debt obligation receives the value of the remaining collateral minus the debt, stability commission, and liquidation penalty.

The collateral wTON is tendered in a liquidity contract, and custodians can automatically buy the wTON by paying DurovUSD. Any DurovUSD paid in this manner is immediately removed from the DurovUSD market until an amount equal to the amount outstanding on the collateralized debt obligation is removed.

If the amount of DurovUSD more than the outstanding amount is paid, the excess DurovUSD will be used to purchase wTON in the market and then remove it from the market, resulting in a positive change in the ratio of TON to wTON. As a result, the net value of wTON held by holders will increase.

If the sale of wTON does not generate enough DurovUSD to cover the entire debt, additional wTON will be continuously created and sold. The new volume of wTON created in this way changes the ratio between TON and wTON in a negative direction, causing wTON holders to lose value.