Liquidations and buy-ins

The two financing directions require different closeout logic.

Cash financing liquidation

When RWA collateral no longer safely covers stablecoin debt, the protocol sells some or all of the RWA collateral and returns stablecoins to the funding vault.

RWA borrowing buy-in

When the value of borrowed RWA inventory rises enough to make the account unsafe, the protocol uses locked stablecoin collateral to purchase the RWA and return it to the inventory vault.

note

Flow A sells the RWA to repay cash. Flow B buys the RWA to return inventory.