Gas compensation

In the jAsset protocol, maximizing liquidation throughput is crucial to promptly handle undercollateralized Troves. Liquidators, who may also hold Stability Pool deposits, play a pivotal role by profiting from these liquidations.

However, substantial gas costs pose a challenge. High gas costs for public liquidation functions may deter liquidators, resulting in prolonged undercollateralized Trove states.

To incentivize timely liquidations, the protocol directly compensates liquidators for their gas costs, ensuring they can break even or profit even during periods of high gas prices. Gas compensation consists of both jUSD and collateral:

• Collateral: Taken from the liquidated Trove.

• jUSD: Provided from a Liquidation Reserve funded when a borrower first issues debt. Each liquidation transaction draws from this reserve to compensate the liquidator. If multiple Troves are liquidated in a single transaction, contributions from each Trove accumulate towards the total compensation.

Gas compensation per liquidated Trove follows this formula: 5 jUSD + 0.5% of the Trove's collateral.

Gas Compensation Schedule

• Opening a Trove: A borrower issues an additional 5 jUSD debt to a dedicated contract, the "gas pool," for gas compensation.

• Closing an Active Trove: Upon Trove closure, 5 jUSD is burned from the gas pool, and the corresponding debt on the Trove is canceled, refunding the gas compensation.

Gas Compensation and Redemptions

• Redemptions: When a Trove is redeemed, it's against the debt minus the initial 5 jUSD. This ensures that the gas compensation remains intact for liquidators.