TermRedemption
Collateral taken from a HEALTHY position. On every lender we serve this is a PERMISSIONLESS ARBITRAGE that defends the stablecoin’s peg — not a liquidation, and not a governance decision. Rendering only the effect ("your collateral can be taken") misleads.
permissionless-arbitrage — any holder of the debt token, any time. (governance / protocol are reserved and unused.)
below-peg — it only pays them while the token trades under its target.
lowest-rate-first (Liquity family — your rate IS your queue position) | pro-rata (Resupply — every borrower is skimmed, nothing to out-run) | lowest-collateral-ratio.
usd-neutral — the fee stays in the position as extra collateral, so the borrower loses EXPOSURE, not value. Do not render this as "you lose your collateral".
What the borrower can do. ABSENT when order: pro-rata — there is nothing.
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