DA-06 · LESSON 04

Repo and trim economics

KEY DEFINITIONS

Terms used in this lesson

Collateral: An asset pledged against a debt; it can be used to cover the debt if agreed conditions are breached.
Proof-of-work target: The maximum header-hash value accepted for a block; lowering it makes valid hashes harder to find.
Vault: A set of Bitcoin outputs and spending rules that holds collateral and represents the current loan state.
UNIT: Ducat’s dollar-pegged stablecoin, the asset a borrower can create against bitcoin collateral.
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.

Full and partial liquidation change collateral, debt, liquidator consideration, and reserve flows through different transaction shapes.

65 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
REQUESTRepo and trim economics
The Repo and trim economics 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, Repo and trim economics. The Repo and trim economics 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 and a target with 1 BTC, 50,000 UNIT debt, and BTC at $50,000. Its collateral ratio is 1.00. The minimum vault ratio is 1.25 and subsidy thresh…

MECHANISM

Use current vault state, price contract, and configured collateral rules to identify full or partial liquidation eligibility.

AFTER

The full quote has a 25,000,000-sat deficit. A 50 percent recapitalization carries 50 percent of the target collateral, debt, and calculated deficit into a separately validat…

Text equivalent: Starting from Use captured source test terms and a target with 1 BTC, 50,000 UNIT debt, and BTC at $50,000. Its collateral ratio is 1.00. The minimum vault ratio is 1.25 and subsidy threshold is 1.30. The mechanism begins when Use current vault state, price contract, and configured collateral rules to identify full or partial liquidation eligibility. The resulting lesson is The full quote has a 25,000,000-sat deficit. A 50 percent recapitalization carries 50 percent of the target collateral, debt, and calculated deficit into a separately validated partial transition.

2. Mechanism pathSelect a stage to inspect its job

STAGE 1 OF 4

Select eligible targets

Use current vault state, price contract, and configured collateral rules to identify full or partial liquidation eligibility.

Complete path: 1. Select eligible targets: Use current vault state, price contract, and configured collateral rules to identify full or partial liquidation eligibility. 2. Map debt treatment: Repo clears target debt; trim validates an absorbed-debt amount and requires an actual deficit. 3. Map collateral consideration: Calculate claimed satoshis and the resulting liquidator and target successor relationships from the source-defined quote. 4. Balance all successors: Verify claimed collateral, absorbed UNIT, reserve effects, fees, and any continuing vault debt as one atomic transaction.

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. Verify claimed collateral, absorbed UNIT, reserve effects, fees, and any continuing vault debt as one atomic transaction.

CHANGED CONDITION

A missing, malformed, stale, unauthorized, or inconsistent required input stops at its first named boundary. Trim has its own deficit, absorbed-debt, claimed-sats, role, and successor validation; it is not merely a scaled full liquidation.

Important distinction: Trim is a smaller repo with every amount multiplied by the same percentage. Trim has its own deficit, absorbed-debt, claimed-sats, role, and successor validation; it is not merely a scaled full liquidation.

Text equivalent: The accepted path is enforced by The worked case executes the named inputs and checks in the displayed order. Verify claimed collateral, absorbed UNIT, reserve effects, fees, and any continuing vault debt as one atomic transaction. If the required condition changes, A missing, malformed, stale, unauthorized, or inconsistent required input stops at its first named boundary. Trim has its own deficit, absorbed-debt, claimed-sats, role, and successor validation; it is not merely a scaled full liquidation.

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Learn the idea

Repo is the captured full-liquidation path that clears each target vault's debt. Trim is partial recapitalization: it absorbs part of a target's debt and claims a corresponding amount of collateral while leaving a successor state.

GUIDED EXPLANATION1/4 ideas inspected

Select eligible targets

Use current vault state, price contract, and configured collateral rules to identify full or partial liquidation eligibility.

The worked example follows the explanation

Inspect every idea above to open it.

Important distinction“Trim is a smaller repo with every amount multiplied by the same percentage.”

Trim has its own deficit, absorbed-debt, claimed-sats, role, and successor validation; it is not merely a scaled full liquidation.

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.