Redistributions
When Liquidations that happen when Stability Pool is empty or smaller than the liquidated debt
When do they happen?
If someone gets liquidated and the Stability Pool doesn’t have enough AXD to cover that person’s debt, the leftover debt and collateral are spread across all the other open Troves. Everyone “picks up” a tiny slice, proportional to how much collateral they already had in the system.
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How it’s actually done (without blowing up gas costs)
• The protocol doesn’t update every Trove one by one (too expensive).
• Instead, it keeps a couple of running totals (“trackers”).
• Your Trove stores a snapshot of those trackers the last time you touched it.
• When you next do anything (borrow, repay, adjust collateral), the contract calculates your pending share from those trackers and adds it to your Trove in one go.
You (or anyone) can also call a function to “apply” those pending gains to your Trove even if you’re not changing anything else.
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About interest on redistributed debt
Any extra debt you pick up through redistribution doesn’t start earning interest until it’s formally applied to your Trove. So if you’ve got pending redistributed debt, part of your position is effectively interest-free until you (or someone) applies it.
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“Corrected stakes”: keeping it fair for new vs. old Troves
Problem: After a liquidation, older Troves are sitting on un-applied (“pending”) extra collateral and debt. A brand-new Trove has none of that. If we just used raw collateral numbers, the new Trove would unfairly get a bigger slice of the next redistribution.
Solution: When a new Trove opens (or when an existing one is updated), the system gives it a “corrected stake”—basically scaling its stake down to match what everyone else effectively has after those pending gains. That way, everyone earns the same per unit of real collateral.
Every time you adjust your Trove, your pending gains are applied and your corrected stake is recalculated.
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TL;DR
• Liquidation leftovers get spread across all Troves, proportional to size.
• Updates are tracked globally; your Trove only gets updated when you interact.
• Pending redistributed debt doesn’t accrue interest yet.
• “Corrected stakes” make sure new Troves don’t get an unfair advantage.
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Example with sAVAX Collateral
The following serves as an illustration of the mechanic of Redistribution:
The Stability Pool is empty.
A Trove (Trove X) gets liquidated:
Debt: 1,000 AXD
Collateral: 32.26 sAVAX
There are currently 2 active Troves in the system:
A
64.52 sAVAX
2,000
B
16.13 sAVAX
500
Total active collateral = 80.65 sAVAX → Trove A holds 80% of the collateral, B holds 20%.
🔄 Redistribution Outcome (80:20 split):
The liquidated debt (1,000 AXD) and 32.26 sAVAX get split:
Trove A (80%) receives:
+25.81 sAVAX
+800 AXD debt
Trove B (20%) receives:
+6.45 sAVAX
+200 AXD debt
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