# Stability Pool and Liquidations

## What is the Stability Pool (SP)?

The Stability Pool (SP) serves as a crucial mechanism within the Satoshi Protocol, designed to preserve the system's stability by providing liquidity for settling debts from liquidated Positions. When a Position undergoes liquidation, the SP uses satUSD to clear the debt and, in return, acquires the collateral from the liquidated Position. This process maintains the integrity of the protocol by ensuring that under-collateralized positions do not threaten the system’s stability.

## Why Contribute satUSD to the Stability Pool?

Stability Pool providers are incentivized through several mechanisms:

* **Collateral Gains**: When liquidations occur, SP providers receive discounted collateral in proportion to their satUSD holdings in the pool.
* **Liquidation Trigger Rewards**: Users who initiate liquidations earn 0.25% of the collateral and 2 satUSD as gas compensation.
* **Revenue Sharing**: Revenue earned by the protocol will be shared with staked OSHI holders.

## Liquidation Mechanics

Liquidations ensure that satUSD is always fully backed by collateral. Positions with a collateral ratio below 110% are eligible for liquidation. Any user can trigger a liquidation, which helps maintain the stability of the protocol by removing riskier positions.

## Liquidation Process and Incentives

* Once a position’s collateral ratio drops below 110%, it becomes eligible for liquidation.
* The liquidation is initiated by any user, who is rewarded with 0.25% of the collateral and 2 satUSD for gas fees.
* The Stability Pool absorbs the position’s debt and acquires its collateral.

## Benefits for Stability Pool Providers

* Stability Pool Providers gain a share of liquidated collateral, typically at a discounted rate.
* These gains are in proportion to their satUSD contributions to the pool.

## Withdrawal Policies

Stability Pool providers can generally withdraw their satUSD from the Stability Pool without restrictions. However, withdrawals may be temporarily paused during pending liquidations to ensure sufficient liquidity is available for settling debts.

## Risks and Considerations

While contributing to the Stability Pool offers potential rewards, it also comes with risks:

* **Sub-Optimal Liquidations**: Stability pool providers might incur losses if liquidations occur at unfavorable collateral ratios.
* **satUSD-to-Collateral Value Discrepancies**: The value of the collateral obtained through liquidations can fluctuate, impacting the overall returns.


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://docs.river.inc/satoshi-protocol-v1/mechanism/stability-pool-and-liquidations.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.