Settlement order
This is batt’s intended settlement order. The implementation still needs to be checked to confirm when each step applies, its exceptions, and the calls that execute it. Other protocols based on Liquity v2 may use a different order.1. Stability Pool
The SP uses KRW* deposited in advance to offset liquidated debt. Any debt it cannot cover moves to the next stage. See Stability Pool for changes to pool assets and depositor returns.2. JIT liquidation
JIT liquidators supply funds at liquidation to repay debt left after the SP. See JIT liquidation for the conditions they need to execute a trade.3. Redistribution
After the SP and JIT stages, batt transfers any remaining collateral and debt to other positions under the protocol’s rules. The debt is transferred to those borrowers, not cancelled. If your position receives a redistribution, you can end up with more collateral and more debt without taking out a new loan. Compare the value of the collateral you receive with the debt added to your position.Remaining risks
A sharp price decline can coincide with insufficient SP funds, few JIT liquidators, and thin collateral liquidity. Losses can remain after every stage. Redistribution moves the exposure to other positions; it does not eliminate it.
Monitor your collateral ratio