DA-06 · LESSON 05

The 8-9% claim

KEY DEFINITIONS

Terms used in this lesson

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.
Slippage: Additional price movement incurred while filling a trade at available market depth.
UNIT: Ducat’s dollar-pegged stablecoin, the asset a borrower can create against bitcoin collateral.
BTC: The common market ticker for bitcoin.
Spread: The gap between executable buy and sell prices in a market.

Any quoted liquidation profit must be decomposed into active tax, subsidy, collateral ratio, execution costs, slippage, and price movement rather than memorized.

35 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
REQUESTThe 8-9% claim
The The 8-9% claim 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, The 8-9% claim. The The 8-9% claim 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 hypothetical values only: suppose the protocol-side gross value received is 9.0% of capital committed.

MECHANISM

Read the active liquidation tax, subsidy schedule, collateral threshold, reserve-rate floor, and whether the action is a full repo or partial trim.

AFTER

This example explains the arithmetic; it does not assert Ducat’s current configuration or promise an 8% return. Real inputs must come from the versioned profile and execution…

Text equivalent: Starting from Use hypothetical values only: suppose the protocol-side gross value received is 9.0% of capital committed. The mechanism begins when Read the active liquidation tax, subsidy schedule, collateral threshold, reserve-rate floor, and whether the action is a full repo or partial trim. The resulting lesson is This example explains the arithmetic; it does not assert Ducat’s current configuration or promise an 8% return. Real inputs must come from the versioned profile and execution record.

2. Mechanism pathSelect a stage to inspect its job

STAGE 1 OF 4

Identify gross protocol consideration

Read the active liquidation tax, subsidy schedule, collateral threshold, reserve-rate floor, and whether the action is a full repo or partial trim.

Complete path: 1. Identify gross protocol consideration: Read the active liquidation tax, subsidy schedule, collateral threshold, reserve-rate floor, and whether the action is a full repo or partial trim. 2. Measure what the liquidator gives and receives: Value the UNIT, BTC collateral, and any reserve flows at explicit prices and times. Keep protocol transfers separate from market P&L. 3. Subtract execution costs: Include parent-and-child transaction fees where applicable, slippage, spread, funding, hedging, custody, and capital costs. 4. Stress price and confirmation delay: The BTC price can move between detection, construction, broadcast, and settlement. A quoted gross percentage can disappear under adverse execution.

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

ACCEPTED PATH

The arithmetic includes the stated gross rate, every named cost, units, capital denominator, measurement period, and versioned source for any protocol parameter.

CHANGED CONDITION

Omitted costs, adverse price drift, failed execution, stale inputs, or unsupported live settings can erase the return and require the public claim to be repaired.

Important distinction: Ducat liquidations always pay liquidators 8-9% net profit. No. The result varies with configuration, collateral state, transaction shape, fees, market execution, and price movement.

Text equivalent: The accepted path is enforced by The arithmetic includes the stated gross rate, every named cost, units, capital denominator, measurement period, and versioned source for any protocol parameter. If the required condition changes, Omitted costs, adverse price drift, failed execution, stale inputs, or unsupported live settings can erase the return and require the public claim to be repaired.

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Learn the idea

The ‘8-9% liquidation profit’ is not a timeless protocol constant. It is an economic result that must be recalculated from the active Ducat profile and the actual trade. The app should never ask you to memorize it without showing the inputs.

GUIDED EXPLANATION1/4 ideas inspected

Identify gross protocol consideration

Read the active liquidation tax, subsidy schedule, collateral threshold, reserve-rate floor, and whether the action is a full repo or partial trim.

The worked example follows the explanation

Inspect every idea above to open it.

Important distinction“Ducat liquidations always pay liquidators 8-9% net profit.”

No. The result varies with configuration, collateral state, transaction shape, fees, market execution, and price movement.

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.