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DocumentationStabilizersAdding Collateral

Adding Collateral to Stabilizers

Learn how to add collateral to your stabilizer position and manage it effectively to support the USPD system and avoid liquidation.

Adding Initial Collateral

After minting a Stabilizer NFT, you must add ETH collateral to it. This collateral is held in your dedicated StabilizerEscrow and is used to overcollateralize USPD when users mint new tokens.

// Add ETH collateral to your stabilizer's unallocated funds
function addUnallocatedFundsEth(uint256 tokenId) external payable {
    // The amount of ETH sent with the transaction becomes available collateral
}

For a detailed explanation of how this collateral is allocated, see the USPD Architecture documentation.

Managing Collateral Levels

Checking Current Collateral

It is crucial to monitor your position’s collateralization ratio. To be safe from liquidation by any other stabilizer, you must keep your ratio above 125%. If your ratio falls below this level, the owner of Stabilizer NFT #1 can liquidate your position. If it falls further, other stabilizers with lower-priority NFTs can also initiate liquidation.

Withdrawing Excess Collateral

If the price of ETH increases, your position’s collateralization ratio will rise. This may allow you to withdraw the excess stETH collateral while still maintaining a ratio safely above the 125% liquidation threshold.

  1. Calculate your current collateralization ratio.
  2. Determine the maximum amount of collateral you can withdraw.
  3. Execute the withdrawal transaction.

Best Practices

  1. Regular Monitoring: Check your position’s health frequently, especially during volatile market periods.
  2. Buffer Maintenance: Keep a healthy safety buffer above the 125% liquidation threshold to protect against sudden price drops.
  3. Price Awareness: Monitor ETH price movements and their impact on your collateral value.
  4. Gas Optimization: Consider gas fees when adding or withdrawing collateral to optimize costs.

Safety Considerations

  • Never let your collateralization ratio approach the 125% threshold.
  • Maintain additional collateral in reserve to add quickly during market downturns.
  • Monitor gas prices for optimal transaction timing.

Next Steps

USPD StabilizersLiquidation Process