The Pulse of Orby: Streamlining Liquidations for Efficiency and Inclusivity
A Primer on Orby Network’s key features — Part 2
GM Orbies!
This is Captain Orby at the helm. 🚀🎙️
Welcome to our in-depth exploration series, as we dive into the heart of Orby — exploring key features, understanding their purpose, and breaking down what it all means for you as a user.
For those cosmic adventurers who are just joining our ranks, or if you’ve drifted a bit off course, you can find our foundational articles here:
Making liquidations more efficient
The Stability Pool (SP) is a relatively unique approach to liquidations. In contrast to its counterparts, Orby relies on the Stability Pool as the primary funding source for liquidations. Users are incentivised to contribute USC upfront, creating a pool specifically reserved for liquidations. When a loan falls below the liquidation threshold, this pooled USC is then swiftly deployed to settle outstanding debts. Simultaneously, collateral from the liquidated user is transferred to the Stability Pool as payment to liquidity providers.
Conversely, other protocols that also rely on third-party liquidators require these parties to supply their own capital to pay off any outstanding debt. This not only creates barriers to entry for smaller retail users, but could also lead to more bad debt if the outstanding debt positions are not profitable enough (after transaction fees) to incentivise external players to pay them off. Such a scenario could potentially occur during periods of high gas fees or for smaller debt positions.
On Orby, the capital needed for liquidations is provided by users, not just third-party liquidators, leading to a unique profit distribution model. Instead of profits solely benefiting the liquidator, they are shared among all liquidity providers, thereby democratizing the liquidation process for wider participation.
What does it mean for you?
The SP is a mechanism that not only ensures the efficiency of liquidations but also empowers a broader user base to actively participate in and benefit from the process.
Ultimately, the Stability Pool allows ordinary users like yourself to profit off liquidations on Orby. On top of this and in order to bootstrap liquidity, we will also be further incentivising depositors to the SP in the following ways:
- A share of protocol revenue
- esORB incentives
it’s clear that the Orby Network’s Stability Pool (SP) represents a paradigm shift in the realm of liquidation protocols. By democratizing the process and incentivizing user participation, Orby aligns with the true spirit of decentralization — where every member not only contributes to the health of the network but also shares in its success.
Stay with us as we continue our odyssey through the Orby Network.
Captain Orby out🎙️
