Stability Pool
What is the Stability Pool?
The Stability Pool is an efficient solution for removing under-collateralized debt from Based. The pool provides upfront liquidity to repay debt from liquidated vaults—ensuring that the total BSD supply always remains over collateralized.
When any vault is liquidated, an amount of BSD corresponding to the remaining debt of the vault is burned from the Stability Pool’s balance to repay its debt. In exchange, the entire collateral from the vault is transferred to the Stability Pool.
How do I benefit as a Stability Provider?
As a Stability Provider, you deposit BSD into the Stability Pool. When vaults are liquidated (typically just below a 110% collateral ratio), your BSD is used to repay their debt, and you receive a pro-rata share of their sBTC collateral—usually worth more than the BSD burned.
Over time, your BSD balance decreases, but your sBTC rewards grow. The more BSD you deposit and the longer you remain in the pool, the greater your share of liquidated collateral.
When can I withdraw?
You can withdraw your BSD or sBTC from the Stability Pool any time. There is no minimum lockup duration. If there are undercollatearlized vaults that have not been liquidated yet liquidations will have priority over withdrawals.
Can I lose money by depositing to the Stability Pool?
Liquidations typically occur between 100–110%. However, it is theoretically possible that a vault will be liquidated below 100% in a flash crash, oracle failure, or some other unforeseen condition. In such a case you may experience a net loss in dollar terms.
What happens if the Stability Pool is empty when liquidations occur?
If the Stability Pool is empty, the system uses a secondary liquidation mechanism called Redistribution. In such a case, the system redistributes the debt and collateral from liquidated vaults to all other existing vaults.
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