Collateral Auctions
The ADADAO Protocol's auction procedures allow the system to liquidate Vaults even when price data for the collateral is unavailable. The ADADAO Protocol takes the liquidated Vault collateral and sells it via an internal market-based auction process at the point of liquidation. This process is known as Collateral Auction.
The AUSD acquired from the Collateral Auction are used to pay off the Vault's outstanding debts, including the Liquidation Penalty fee established by ADAO voters for that specific Vault collateral type.
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