Is a vault's collateral ratio the same as its loan-to-value ratio?

A collateral-to-debt ratio and a loan-to-value ratio put the same values on opposite sides of the division. Collateral-to-debt divides collateral value by debt value; loan-to-value divides debt value by collateral value. Stronger backing raises the first ratio and lowers the second. Comparing their displayed percentages directly would confuse two different measures of the vault's leverage.

Are stablecoin-backed vaults exempt from liquidation?

Stablecoin-backed vaults remain subject to their applicable liquidation ratio. A collateral token's dollar target does not remove the requirement to maintain sufficient value against outstanding debt. The documented liquidation design includes stable-asset vaults, with a different bonus from volatile-collateral vaults.

Does holding MAI in a wallet reduce the debt recorded against collateral?

MAI held in a wallet reduces vault debt only when it is actually applied as a repayment. A loan can therefore retain its liquidation exposure while its owner holds enough MAI elsewhere to repay it.

What debt valuation applies when MAI trades away from its dollar target?

The QiDao design described in Introducing QiDao V2, published June 28, 2022, assumes a debt value of $1 per MAI. That accounting rule separates the recorded loan value from MAI's exchange price. It concerns the described vault design, rather than establishing every deployment's current configuration. The market cost of acquiring repayment tokens is a separate amount.

Which party can change the borrowing charges that affect a vault's debt?

QiDao's community governance can change protocol charges through proposals and votes by Qi token holders. Qi has that governance role, while MAI is the loan currency. Where a vault applies interest, changes to its applicable charges can influence debt growth and future collateral coverage. A loan's initial cost description therefore does not establish a permanent interest setting.

Can anyone execute a liquidation on every QiDao vault?

Public liquidation access depends on the contract's implementation and configuration. In the published erc20Stablecoin implementation, any caller may execute the liquidation function when no stability pool address is configured; otherwise, only that pool may call it. The caller also needs sufficient MAI and an eligible vault. Holding MAI alone therefore does not establish access to every liquidation mechanism.

Maifinance liquidations - Vault Thresholds and Collateral Outcomes

Maifinance liquidations become possible when a QiDao vault's collateral-to-debt ratio falls below the minimum that applies to its collateral type. The partial-liquidation path lets a liquidator repay MAI debt and receive collateral from that vault. A more severely impaired position can face an ownership-transfer mechanism where its contract supports that branch. Each selected vault has its own minimum, so another position's threshold cannot establish its eligibility. Collateral prices, outstanding debt, and applicable interest determine the distance to the boundary. Adding collateral or repaying debt can improve the ratio before liquidation executes, while a completed partial liquidation changes both sides of the balance.

The vault owner, the liquidator, and MAI debt

Maifinance connects users to QiDao, whose vaults hold collateral against MAI loans. A liquidation concerns the backing of an individual debt position. The vault owner supplied the collateral, while a liquidator supplies MAI to repay debt through the applicable liquidation mechanism. Those roles explain why losing collateral can coincide with owing less MAI.

Collateral remains exposed to changes in its value while it backs the loan. Borrowing against a holding therefore preserves price exposure, including the possibility that a decline will cross the vault's liquidation boundary. The threshold governs how much backing must remain relative to debt.

How does the collateral-to-debt ratio set the trigger?

The collateral-to-debt ratio sets liquidation eligibility by comparing the vault's valued collateral with its outstanding debt against the applicable minimum. A below-minimum result makes the position eligible for its supported liquidation mechanism.

Values on each side of the ratio

The relationship is R = 100 * C / D, where R is the percentage ratio. C represents collateral value, and D represents positive outstanding debt value. Both values need the same valuation unit.

Collateral value

A falling collateral price reduces C even when the vault holds exactly the same number of tokens. Depositing additional accepted collateral increases the backing available to the position.

Outstanding debt

Additional borrowing increases D, while repayment reduces it. A larger debt balance needs proportionally more collateral value to maintain the same ratio.

The minimum for the selected vault

The liquidation minimum belongs to the vault type and reflects its collateral's risk profile. The gap above that minimum provides a buffer against adverse changes. A hand calculation explains the relationship; the contract's eligibility calculation determines whether its trigger has actually been crossed.

Partial repayment and collateral compensation

The partial-liquidation mechanism exchanges debt relief for collateral from the affected vault. The documented half-debt liquidation path repays 50% of the vault's outstanding MAI debt. The liquidator needs sufficient MAI to fund that repayment. In this path, the original owner retains the vault with reduced debt and reduced collateral.

The repayment fraction measures the debt settled. It does not describe the share of all collateral that the owner loses.

The bonus and the cost to the vault owner

A liquidation bonus compensates the liquidator in addition to the collateral value corresponding to the debt repaid. The owner receives debt relief while surrendering collateral worth more than that repayment.

The published volatile-collateral model uses a 10% bonus on repaid debt value. The documented stable-asset counterpart uses 5%. These values describe that design; contract-specific parameters govern the deductions from a particular vault.

The half-debt example also includes a 0.5% repayment fee on the debt repaid, taken from vault collateral. Other fee combinations can apply to QiDao loans.

The owner's net loss therefore requires accounting for both the debt removed and the collateral deducted, including applicable charges. Applying the bonus percentage to the entire original deposit would use the wrong calculation base.

Visual outline: Maifinance liquidations - The bonus and the cost to the vault owner

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Can a vault become liquidatable without a collateral price fall?

A vault can become liquidatable at an unchanged collateral price if applicable interest grows its debt enough to cross the minimum ratio. Interest charges increase outstanding debt in the loan token. The numerator can remain steady while the denominator rises, reducing collateral coverage over time.

QiDao permits different combinations of loan charges, so a historical zero-interest description does not establish every vault's present terms. The selected vault's charges determine whether interest contributes to its changing debt. Yield-bearing collateral may earn value while deposited, but expected future earnings do not establish the collateral value available at the liquidation boundary. Interest charges and collateral earnings affect different sides of that calculation.

Collateral deposits and MAI repayments

Adding accepted collateral increases the ratio's numerator, while repaying MAI decreases its denominator. Either adjustment can improve collateralization before a liquidation executes, subject to the selected vault's rules. The amount required depends on current collateral value, outstanding debt, and the minimum that the position must satisfy.

Repayment can carry a fee denominated in collateral, which affects the net balances after the adjustment. Comparing the resulting ratio therefore requires both the reduced debt and the collateral remaining after applicable deductions. Depositing collateral commits more assets to the existing position; repayment reduces the MAI obligation. The choice turns on which asset is available and how much additional collateral exposure the owner wants to retain.

A falling ratio and two possible corrections

A missing liquidation minimum prevents a firm eligibility decision, even when the balance arithmetic is clear. In this hypothetical example, all amounts and resulting percentages are illustrative. Let L represent the actual minimum for the selected vault. Assume permitted adjustments complete before liquidation, with no fees or other price changes during the comparison.

The collateral value falls from $10,434 to $9,324 while MAI debt retains a dollar-equivalent accounting value of $7,400. The ratio falls from 141% to 126%: 100 * 9,324 / 7,400 = 126. Comparing that 126% with L shows whether the vault is below its liquidation minimum. The comparison leaves the vault unchanged.

Adding collateral worth $1,036 would raise collateral value to $10,360 and leave debt value at $7,400. The resulting ratio would equal 140%. Alternatively, repaying enough MAI to reduce debt value by $740 would leave $6,660 of debt against $9,324 of collateral. That ratio would also equal 140%.

Both adjustments reach 140% through different balances. If L lies strictly between 126% and 140%, either completed adjustment would move this example above the minimum. If L exceeds 140%, neither would suffice. If L equals 140%, both calculations meet the minimum without providing an extra buffer. When L is 126% or lower, the observed decline has not crossed that minimum. Actual fees or intervening price changes would alter these outcomes.

The ownership-transfer branch in QiDao V2

Partial liquidation can worsen collateralization when the collateral-to-debt ratio minus 100% falls below the liquidation bonus percentage. Where supported, the alternative mechanism is buyRisky. The buyRisky branch transfers ownership of the unhealthy debt position to a liquidator. The acquiring party must then repay enough MAI debt to restore healthy collateralization. If the vault remains unhealthy after acquisition, another actor may acquire it through buyRisky.

QiDao Protocol's Introducing QiDao V2, published June 28, 2022, described complete vault acquisition below a 110% collateral-to-debt ratio. That figure belongs to the announced V2 design; it does not establish a universal current cutoff. The relevant contract's liquidation branches determine whether an owner faces partial repayment or loss of the position itself.

What changes after a partial liquidation?

A completed partial liquidation reduces MAI debt and collateral while leaving the original owner with the remaining vault. The resulting ratio depends on both new balances, including any collateral deductions. A completed repayment is different from the earlier state in which the vault merely qualified for liquidation.

Further adverse changes can make a partially liquidated vault eligible again. The remaining collateral, debt, and recorded owner distinguish partial repayment from an ownership transfer. The next decision concerns the remaining position: whether to add collateral, repay more MAI, or continue carrying debt against the available backing.

Maifinance liquidations: frequently asked questions

Is a vault's collateral ratio the same as its loan-to-value ratio?: A collateral-to-debt ratio and a loan-to-value ratio put the same values on opposite sides of the division. Collateral-to-debt divides collateral value by debt value; loan-to-value divides debt value by collateral value. Stronger backing raises the first ratio and lowers the second. Comparing their displayed percentages directly would confuse two different measures of the vault's leverage.
Are stablecoin-backed vaults exempt from liquidation?: Stablecoin-backed vaults remain subject to their applicable liquidation ratio. A collateral token's dollar target does not remove the requirement to maintain sufficient value against outstanding debt. The documented liquidation design includes stable-asset vaults, with a different bonus from volatile-collateral vaults.
Does holding MAI in a wallet reduce the debt recorded against collateral?: MAI held in a wallet reduces vault debt only when it is actually applied as a repayment. A loan can therefore retain its liquidation exposure while its owner holds enough MAI elsewhere to repay it.
What debt valuation applies when MAI trades away from its dollar target?: The QiDao design described in Introducing QiDao V2, published June 28, 2022, assumes a debt value of $1 per MAI. That accounting rule separates the recorded loan value from MAI's exchange price. It concerns the described vault design, rather than establishing every deployment's current configuration. The market cost of acquiring repayment tokens is a separate amount.
Which party can change the borrowing charges that affect a vault's debt?: QiDao's community governance can change protocol charges through proposals and votes by Qi token holders. Qi has that governance role, while MAI is the loan currency. Where a vault applies interest, changes to its applicable charges can influence debt growth and future collateral coverage. A loan's initial cost description therefore does not establish a permanent interest setting.
Can anyone execute a liquidation on every QiDao vault?: Public liquidation access depends on the contract's implementation and configuration. In the published erc20Stablecoin implementation, any caller may execute the liquidation function when no stability pool address is configured; otherwise, only that pool may call it. The caller also needs sufficient MAI and an eligible vault. Holding MAI alone therefore does not establish access to every liquidation mechanism.

Updated: Mon, 19 Oct 2026