Anti-Liquidation Protection - Collateral Rebalancing

If the collateral ratio increases above the maximum collateral, the position on the MM will be liquidated. This is typically a bad outcome for money market participants, as there is often a liquidation fee, and if the price of the collateral or borrowed asset (whichever caused the liquidation) mean-reverts, the impact is amplified as bad. YieldFi has built an automated system which will automatically rebalance the collateral ratio if the position meets a predefined threshold. YieldFi is able to configure a maximum and minimum collateral ratio for the strategy. If the strategy becomes de-ranged, a collateral rebalance transaction is triggered by a Keeper to rebalance the position back within range.

The impact of this novel technology should not be underestimated. Crypto markets trade 24/7 and are often subject to large spikes which cause cascading liquidations in money markets. We have a Keeper which will automatically rebalance our positions on behalf of the end users 24/7.