Liquidations & backstop

Liquidation is open. Any address may repay USDG against an underwater account and receive collateral plus a bonus. Assets that never earned borrow power are not part of the recovery path — they were already worthless as collateral.

Tranches

Prefer partial liquidations. Close enough debt to restore HF above 1.0 rather than seizing the entire book in one shot. Liquidator bonus default: 5%.

$CROSS backstop

Staked $CROSS is first-loss capital. It absorbs residual bad debt after liquidations and earns a risk premium plus a share of interest. Stake is slashable on default — that is the point of the token. Socialized loss across borrowers is last resort and must be public.

Stress case

Meme leg gaps −90% while US equities are closed. Weekend haircuts should already have reduced stock power; meme share caps limit how much of the account depended on the trench asset; backstop covers residual shortfall.