General

Unda is a decentralized borrowing protocol that allows users to borrow against their collateral assets without having to pay interest rates. Users can open a position called a 'vault' by locking up KOIN tokens as collateral. They then have the possibility to mint KUSD, a stablecoin pegged to the US Dollar. A minimum collateralization ratio of 150% has to be maintained at all times.

If a vault falls below the minimum collateral requirements it becomes possible to liquidate the vault. Holders of other vaults can trigger a liquidation of the 'risky' vault and receive its collateral and debt, in the process making a profit of up to 50%. The owner of the liquidated vault retains the KUSD he minted but is 'fined' for not properly managing his vault's position.

This liquidation mechanism in combination with arbitrage opportunities for vault holders ensures that KUSD remains overly collateralized at all times and a minimum value of $1 is guaranteed.