DA-06 · LESSON 02

Liquidation tax

KEY DEFINITIONS

Terms used in this lesson

BTC: The common market ticker for bitcoin.
Block subsidy: New bitcoin that consensus permits a block's coinbase transaction to create at a particular height.
Collateral: An asset pledged against a debt; it can be used to cover the debt if agreed conditions are breached.
Vault: A set of Bitcoin outputs and spending rules that holds collateral and represents the current loan state.
Slippage: Additional price movement incurred while filling a trade at available market depth.

Protocol calculations combine liquidation threshold and configured tax parameters; observed percentages must be derived from the active profile.

45 min Difficulty 5/5 Not started

VISUAL MODEL

See the whole mechanism before going step by step

Use the diagrams to orient yourself. Then the guided explanation below teaches every part in depth.

4 explanatory views

CONCEPT-SPECIFIC MAP · ducat vaultA Ducat action moves one Bitcoin-anchored vault state to a successorSelect any state to inspect its exact role.

RELATIONSHIP MAPInputs, rule, and outputs

01
PREDECESSORCurrent vault outpoint
The current Bitcoin output anchors collateral and identifies the state being spent.
02
REQUESTLiquidation tax
The Liquidation tax workflow proposes one exact action and successor state.
03
POLICYProfile, oracle, signatures
Applicable policy, price evidence, authorization, and transaction shape are checked.
04
BITCOIN SPENDScript-valid transaction
Bitcoin miners and nodes can include only a transaction that satisfies Bitcoin rules.
05
SUCCESSORNew outpoint and state
Ducat validators reconstruct debt, collateral, token, and account changes from the confirmed transaction.

Rule shown: Bitcoin checks the spend; Ducat components independently reconstruct and validate the additional protocol state.

STAGE 1 OF 5PREDECESSOR: Current vault outpoint

The current Bitcoin output anchors collateral and identifies the state being spent.

Governing relationship: Bitcoin checks the spend; Ducat components independently reconstruct and validate the additional protocol state. Complete path: 1. PREDECESSOR, Current vault outpoint. The current Bitcoin output anchors collateral and identifies the state being spent. 2. REQUEST, Liquidation tax. The Liquidation tax workflow proposes one exact action and successor state. 3. POLICY, Profile, oracle, signatures. Applicable policy, price evidence, authorization, and transaction shape are checked. 4. BITCOIN SPEND, Script-valid transaction. Bitcoin miners and nodes can include only a transaction that satisfies Bitcoin rules. 5. SUCCESSOR, New outpoint and state. Ducat validators reconstruct debt, collateral, token, and account changes from the confirmed transaction.

1. State transitionWhat exists, what changes, and what results

BEFORE

Use captured source test terms only: liquidation threshold 1.5, liquidation tax 0.05, and a 1 BTC collateral claim. These are test values, not a deployed profile.

MECHANISM

Read the liquidation threshold and tax fields from the exact profile used by the candidate vault.

AFTER

The helper's nominal liquidation revenue rate is 1.5 x 0.05 = 0.075. The quote path separately computes a reserve rate that starts at the 0.05 tax and can be reduced by subsi…

Text equivalent: Starting from Use captured source test terms only: liquidation threshold 1.5, liquidation tax 0.05, and a 1 BTC collateral claim. These are test values, not a deployed profile. The mechanism begins when Read the liquidation threshold and tax fields from the exact profile used by the candidate vault. The resulting lesson is The helper's nominal liquidation revenue rate is 1.5 x 0.05 = 0.075. The quote path separately computes a reserve rate that starts at the 0.05 tax and can be reduced by subsidy. Code context and destination must be name…

2. Mechanism pathSelect a stage to inspect its job

STAGE 1 OF 4

Load active parameters

Read the liquidation threshold and tax fields from the exact profile used by the candidate vault.

Complete path: 1. Load active parameters: Read the liquidation threshold and tax fields from the exact profile used by the candidate vault. 2. Choose repo or trim: Full and partial liquidation use different state transitions and may apply the economic terms to different quantities. 3. Calculate gross transfers: Show collateral removed, debt cleared or absorbed, liquidator consideration, and reserve change before execution costs. 4. Label destinations: A tax is not profit until the model identifies who receives it and what offsetting liabilities or costs remain.

3. Rule and failure boundaryWhat accepts the result and where it can stop

ACCEPTED PATH

The worked case executes the named inputs and checks in the displayed order. A tax is not profit until the model identifies who receives it and what offsetting liabilities or costs remain.

CHANGED CONDITION

A missing, malformed, stale, unauthorized, or inconsistent required input stops at its first named boundary. It is one configured protocol flow. Net liquidator return also depends on consideration paid, subsidy, fees, slippage, funding, price movement, and lo…

Important distinction: A liquidation tax is automatically liquidator profit. It is one configured protocol flow. Net liquidator return also depends on consideration paid, subsidy, fees, slippage, funding, price movement, and losses.

Text equivalent: The accepted path is enforced by The worked case executes the named inputs and checks in the displayed order. A tax is not profit until the model identifies who receives it and what offsetting liabilities or costs remain. If the required condition changes, A missing, malformed, stale, unauthorized, or inconsistent required input stops at its first named boundary. It is one configured protocol flow. Net liquidator return also depends on consideration paid, subsidy, fees, slippage, funding, price movement, and losses.

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Learn the idea

A liquidation tax is a configured protocol deduction or transfer applied during liquidation. Its economic effect depends on the active threshold formula, transaction type, claimed collateral, debt absorbed, and destination of each flow.

GUIDED EXPLANATION1/4 ideas inspected

Load active parameters

Read the liquidation threshold and tax fields from the exact profile used by the candidate vault.

The worked example follows the explanation

Inspect every idea above to open it.

Important distinction“A liquidation tax is automatically liquidator profit.”

It is one configured protocol flow. Net liquidator return also depends on consideration paid, subsidy, fees, slippage, funding, price movement, and losses.

FINISH LEARNING FIRST

The questions unlock after every required learning activity

Inspect every guided idea, open the worked example, rebuild its mechanism, and complete the deterministic lesson tool. Your progress is saved automatically.