Asemag Protocol Auction. Through the auction mechanism of the Asemag protocol, the system can still clear the vault even when the price information of the collateral cannot be obtained. During the liquidation process, the Asemag agreement will take out the collateral from the cleared vault and use a market based auction mechanism within the agreement to sell it. This is called a collateral auction. The Dai obtained through collateral auction will be used to repay debts in the vault, including liquidation penalties. ADAO voters will set different liquidation penalties for different types of collateral. If the amount obtained from the collateral auction is sufficient to settle the debt in the vault and pay the liquidation penalty, the auction will be converted into a Reverse Collateral Auction to minimize the number of If the amount obtained from the collateral auction is insufficient to repay the debts in the vault, the loss will become a liability under the Asemag agreement, which will be repaid by Xxx in the Asemag Maker Buffer. If there is not enough Dai in the buffer, the Asemag protocol will trigger the Debt Auction mechanism. During the debt auction, the system will cast new ADAOs (increasing the amount of ADAOs in circulation) and sell them to users who use Dai to participate in the auction. The Dai obtained from the collateral auction will enter the Asemag buffer fund. Asemag buffer funds can serve as a buffer to avoid excessive issuance of ADAO in the future due to insufficient collateral bidding and rising deposit interest rates. If the amount obtained from bidding and stabilization fees exceeds the upper limit of the Asemag buffer (set by Asemag governance), the excess will be sold through a Surplus Auction. During the surplus auction period, bidders use ADAO to bid for a fixed number of Dais, with the higher price being awarded. Once the surplus auction is completed, the Asemag protocol will automatically destroy the ADAO obtained from the auction, thereby reducing the total supply of ADAO. Example of collateral auction process: Due to market conditions, the pledge rate of a large vault has dropped below the minimum threshold. An Auction Keeper detects this phenomenon and initiates a liquidation Each clearing firm can have its own bidding model. The bidding strategy includes the bidding price of the collateral (ETH in this case). The clearing agent initiating the liquidation will use the token price in their bidding strategy as the starting price for the first stage of ...
