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Mobius enforces solvency at two levels: local (within a single Venue Account) and global (across the entire Credit Account). Both can trigger independently.

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Local Liquidation (Venue-Native)

On the trading venue, a Venue Account behaves like a normal account subject to the venue’s own risk engine. If it fails the venue’s local maintenance margin requirement, the venue liquidates positions directly. Key points:
  • The venue’s risk engine acts autonomously — it does not know about the Credit Account.
  • Ample Credit Account collateral does not prevent the venue from liquidating an underfunded Venue Account.
  • Borrowers or Rebalancers must keep each Venue Account funded independently to avoid local liquidation.
  • After a local liquidation, the reduced Venue Account equity feeds back into the Credit Account’s global Health Factor, potentially triggering a global liquidation as well.

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Global Liquidation (Credit Account)

If the global Health Factor of the Credit Account — which blends onchain balances with all Venue Account equity — falls below 11, the entire Credit Account can be liquidated, even when every individual Venue Account is solvent. Process:
  1. Detection: Executors and Rebalancers monitor the Credit Account’s global HF, including venue position snapshots.
  2. Position Closure: The executor submits close-position actions to each venue via the VAM writer interface.
  3. Fund Recovery: After positions are closed, funds are bridged back to the programmable layer.
  4. Debt Repayment & Seizure: A liquidator repays the outstanding debt and claims the remaining collateral, including any Venue Account residuals.
Liquidator cost: LiquidatorCost=TotalCollateralValue×(1−LB)LiquidatorCost = TotalCollateralValue \times (1 - LB)

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Liquidation Incentives

Liquidators are incentivized by the liquidation bonus — they receive collateral at a discount to its market value. The bonus is calibrated per-market to ensure timely liquidations without excessive value extraction:
ParameterDescription
Liquidation Threshold (LTLT)Price decline at which HF hits 1
Liquidation Bonus (LBLB)Discount given to liquidators
BufferGap between LTLT and LBLB to absorb oracle lag and gas costs

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Safety Mechanisms

  • Health check on every operation: The Credit Account verifies HF≥1HF \geq 1 after every multicall.
  • Oracle redundancy: Price feeds use Chainlink-compatible interfaces. Venues with native bridges can provide block-fresh prices via precompiles.
  • Non-rehypothecation: Collateral stays locked in the Credit Account, never lent out, ensuring it is always available for liquidation.