Recovery Mode

The recovery mode is triggered when the total reserve ratio (TRR) falls below 155%. This unlikely scenario will occur when USD value of the ETH across all Caches is less than 155% of the issued PAYD. This mode is triggered to protect the system and trigger a sequence of events to maintain the stability of PAYD.

Liquidation Conditions under Recovery Mode Table
Table: Liquidation Conditions under Recovery Mode.

Liquidations Under Recovery Mode

Liquidation where IRR <= 100%

If IRR<= 100%, the Liquidated Cache ETHs (Less liquidation fee) is distributed to all Healthy Caches, proportional to their Cache’s PAYD debt owing. The Liquidated Cache’s PAYD Issued Debt is also added onto their existing Cache’s PAYD issued debt position. 

Liquidation where 100% < IRR < 115%

Where Rewards Pool Total Staked PAYD > Liquidated Cache’s PAYD Issued Debt

This liquidation is same as Liquidation under normal mode. The Rewards Pool Staked PAYD is offset against the Liquidated Cache’s PAYD issued debt. (Refer to Normal Liquidation)

Where Rewards Pool Total Staked PAYD < Liquidated Cache’s PAYD issued Debt

Similar to liquidations under the normal mode, the Liquidated Cache’s ETH is proportionally given to the Rewards Pool and Healthy Caches. 

Cache’s PAYD Issued debt is offset against Rewards Pool Staked PAYD. Those PAYD that are left unable to be absorbed by the Rewards Pool Staked PAYD will be distributed (Added) onto the rest of the Healthy Caches. (Refer to Normal Liquidations)

Liquidation where 115% < IRR < 155%

Caches where the IRR falls within these ranges have higher collateral backing, hence only ETH amounting to 115% of the Cache’s PAYD issued debt is liquidated, together with entire Cache PAYD issued debt absorbed. 

For example:

  • Issued PAYD is 10,000 and 5 ETH @ 3000 per ETH, or a value of $15,000.
  • Individual Reserve Ratio (IRR) is 150%. 

Only $11,500 worth of ETH is liquidated, the remainder $3,500 worth of ETH (or 1.16666677 ETH) is returned to the Cache user as “Collateral Surplus”. Cache user can claim the Collateral Surplus onto their Wallet upon the next Cache action. is complying with regulatory requirements and is in the midst of a licence application with the Monetary Authority of Singapore. Please note that during this period, our documentation may change and be refined over time.