❓FAQ
In this section, we provide answers to the frequently asked questions.
Last updated
In this section, we provide answers to the frequently asked questions.
Last updated
Atomica Liquidation Markets are non-custodial liquidity pools built on top of Atomica Risk Pools. The pools provide an opportunity to participate in Maker Vault collateral liquidations as a Keeper. Atomica Liquidation Markets accumulate DAI liquidity to enable Liquidity Providers who have less capital to participate in collateral liquidation auctions on their own. The pools also aim to unite Liquidity Providers, take advantage of favorable auction conditions, and get a profit share from selling the collateral.
Another important purpose of the pool is to be a Keeper of Last Resort during stress times of a Maker collateral auctions system. The pool prevents unfair Keepers from winning auctions at a close-to-zero price.
To contribute to the pool and become a Liquidity Provider, you should have a positive DAI balance on your account and add some DAI liquidity to the pool via a UI modal. Click MakerDAO Liquidation Market #1 on the main page. When a new modal appears, make sure the Add Liquidity (Supply) tab is selected on the modal.
The first launched Atomica Liquidation Markets is fed in DAI liquidity, which backs up the ACLTMAKER1 pool tokens. The initial token rate at the pool launch is a single token for a single DAI.
First, a Keeper needs to win an auction and sell the won collateral amount for DAI at a price higher than paid at the auction. In this case, a Keeper receives a DAI amount bigger, than taken from the pool. This amount returns back to the pool. The profit will be proportionally diluted among the pool tokens. So, you will eventually earn from the pool token rate increase.
Not necessarily. A Keeper Adapter will try to win auctions by making bids until a certain limit of a reasonable price is reached. (A reasonable price is the one with a minimum accepted discount to the current market price of the collateral). If other competitors overbid a Keeper Adapter, it won't make a bid for a higher, thus, unreasonable price. So, profits are possible only through winning a collateral at a reasonable price in auctions.
Atomica Liquidation Markets token rate equals a Pool Balance divided by an outstanding token amount.
A positive pool balance supply is formed in two ways: Liquidity Providers add liquidity to it, or the Keeper brings profit from auctions. A negative pool balance supply is formed in two ways, as well: Liquidity Providers withdraw liquidity from it, or the Keeper suffers losses in the result of auctions (in case of a sudden and a continuous collateral price fall).
A positive outstanding token amount supply is only provided through minting a new pool token amount, when Liquidity Providers add liquidity to the pool. A negative outstanding token amount supply happens only when outstanding pool tokens are burnt due to Liquidity Providers withdrawing liquidity from the pool.
Inflow and outflow of DAI liquidity to/ from the Pool performed by any parties other than Liquidity Providers do not cause the change in a pool token amount.
It can be changed only when some changes occur in a Pool Balance with a fixed amount of outstanding pool tokens at the same time.
When a Keeper returns a different amount of DAI to the Pool than it has taken for an auction, the Pool Balance changes. At the same time, an outstanding token amount is fixed.
When a Liquidity Provider adds or withdraws liquidity to/ from the pool, an equivalent of pool tokens is minted/ burned at a fixed token rate for that moment. So, it changes both a Pool Balance and an outstanding token amount in proportion and does not impact the token rate.
A decentralized autonomous organization (DAO), currently based on AragonDAO, handles all the changes and updates processes for Atomica Liquidation Markets. DAO members are formed from the Atomica team members and the Atomica Liquidation Markets community, as well.
If you are trying to withdraw an amount of assets from the Pool, while a certain amount of pool assets is taken by a Keeper Adapter to make bids in currently active auctions, it is possible that there will be not enough assets in the Pool to process your withdrawal request. In this case, you will be asked to sign a withdrawal request that will be put in the withdrawal queue, which will be automatically processed, when there are enough assets paid back to the Pool from the auctions completed.
The initial estimate is based on the value of assets initially taken from the Pool to auctions. Actual results of the auctions may give profits, losses, or no change in the token rate at all. Though we try to perform transactions as quickly as possible, there is still a risk of a sudden price drop, while we try to exchange the won collateral from a collateral asset type to a pool asset type. There can be just the opposite impact, when a collateral asset price increases. This will raise the gained amount, increasing a pool token rate. The higher amount of the won collateral, which is being exchanged, may also decrease an exchange price.
The contracts released under an early beta will not have security audit passed. Though, we are working on possible audit solutions for future releases.
Atomica Liquidation Markets is managed by a DAO that will make decisions about implementing new functionality, strategies, and settings. Additionally, a Keeper Adapter has an allowance to use a share of the pool assets, as well as a set of confirmed addresses it can send assets to (such as Maker auction contracts, an Exchange Contract, and a Pool Contract). You can learn more about Atomica Liquidation Markets safety measures in the Security section.
