> For the complete documentation index, see [llms.txt](https://docs.hubbleprotocol.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.hubbleprotocol.io/faq/usdh-vault/usdh-vault-model-liquidation.md). # Stability Vault Model Liquidation ### Stability Vault Liquidations In order to clear bad debt, USDH from the USDH Vault is burned and collateral is redistributed. In Hubble's original pool, the maximum LTV is 80%. Assuming an 80% LTV, USDH Vault providers essentially receive crypto assets for a \~10% discount. When liquidations are triggered, the balance of each USDH Vault provider's USDH deposit decreases proportionately to the amount of debt being cleared. At the same time, users receive liquidated assets in direct proportion to their contribution to the USDH Vault. For example, if a liquidation equals 10% of the total USDH deposited in the USDH Vault, 10% of each USDH Vault provider's USDH deposit is burned. If a user has deposited 5% of the USDH in the USDH Vault, they will receive 5% of the 89.5% of the assets liquidated (the other 10% is returned to the user, with another 0.5% going to the liquidator). Here is an example of five USDH Vault positions before liquidation: ``` User#1 User#2 User#3 User#4 User#5 USDH Deposit 1500 2500 3500 2000 500 % of SP 15% 25% 35% 20% 5% Total $Value $1500 $2500 $3500 $2000 $500 ``` A position is liquidated that has minted 800 USDH with 10 SOL deposited (1 SOL = 100 USD). The user who triggered the liquidation receives .05 SOL. There is now 800 USDH to clear and 8.95 SOL to distribute to USDH Vault providers. 800 USDH is 8% of the USDH Vault, so 8% of each user's deposit will be burned, and then each user is rewarded their fair share of the 8.95 SOL. Here is the USDH Vault after liquidation: ``` User#1 User#2 User#3 User#4 User#5 USDH Deposit 1500 2500 3500 2000 500 % of SP 15% 25% 35% 20% 5% USDH Burned 120 200 280 160 40 USDH Balance 1380 2300 3220 1840 460 Liq. Reward 1.3425 SOL 2.2375 SOL 3.1325 SOL 1.79 SOL .4475 SOL Reward $Value $107.4 $179 $250.6 $143.2 $35.8 Total $Value $1607.4 $2679 $3750.6 $2143.2 $535.8 ``` Notice that: * Each user has a lower USDH balance after clearing a liquidation. * Each user has increased the total dollar value of their position. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.hubbleprotocol.io/faq/usdh-vault/usdh-vault-model-liquidation.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.