vault liquidation to ensure maintenance of system c-Ratios
as a collateral backed debt issuance platform, it is important that vault and system collateral is maintained at appropriate levels to back any fxToken debt; ensuring each remains representative of their underlying currencies face value.
the core principles, underpinning the protocol liquidation process are;
if the collateral value, or c-Ratio, of a vault falls below its minimum c-Ratio, that vault is deemed to be 'at risk' or "underwater'. In this state it can be subject to a 1:1 redemption call on its collateral by fxToken holders.
if a vault's c-Ratio falls below its liquidation trigger it will automatically be subject to a liquidation process to repay excessive debt and bring the collateral ratios back to acceptable limits.
the protocol makes use of its fxKeeper pools to ensure that liquidation is promptly triggered and executed.