Liquidation

Mobius portfolios span systems with separate solvency boundaries. Each venue protects its local account, while the Robinhood Chain risk engine protects the Credit Account and its lending-pool debt.

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Venue-Native Liquidation

A Venue Account must satisfy the execution venue’s own maintenance-margin requirements. The venue does not rely on Stock Tokens held by the Credit Account or profits held at another venue. If the Venue Account breaches its local requirement, the venue can close or liquidate its positions directly. That action changes the account’s realized PnL and remaining equity. The updated venue state then enters the Mobius global Health Factor. A local liquidation does not automatically close the Credit Account, but the resulting loss can make the global portfolio unhealthy.

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Global Liquidation

The Credit Account is globally liquidatable when: $$HF = \frac{Risk\text{-}Adjusted\ Portfolio\ Value}{Principal + Accrued\ Interest} < 1$$ The global calculation includes direct Robinhood Chain collateral and conservative, authenticated Venue Account values. Global liquidation proceeds through four stages:

1. Restrict activity. New risk-increasing actions are blocked, and pending requests cannot be used to create additional borrowing capacity.
2. Unwind venue exposure. Authorized closure actions reduce open positions and prevent the account from taking new venue risk during the unwind.
3. Recover value. Assets made withdrawable by the venue closures return through the Venue Account workflow and re-enter the onchain portfolio.
4. Repay debt. A liquidator repays the outstanding pool debt and receives the account’s collateral according to the market’s liquidation parameters.

Venue actions settle asynchronously, so the account remains restricted while the unwind is incomplete. Stable request identifiers, explicit statuses, and current venue state prevent a delayed confirmation from being mistaken for a new action.

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Liquidation Incentives

Liquidators receive collateral at a discount defined by the liquidation bonus: $$Liquidator\ Cost = Collateral\ Received \times (1 - Liquidation\ Bonus)$$ The market calibrates the bonus alongside liquidation thresholds, execution costs, and the time required to resolve venue exposure. The incentive must be large enough to attract repayment without extracting unnecessary value from healthy accounts.

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Fail-Closed Safeguards

• Freshness requirements: Stale or unavailable venue state cannot preserve enhanced borrowing power.
• Strategy enforcement: A portfolio outside its strategy constraints loses strategy-specific risk treatment.
• Operation checks: Unhealthy accounts cannot authorize new risk-increasing activity.
• Unwind guard: New venue actions are rejected while positions are being closed.
• Non-rehypothecation: Direct collateral remains attributable to its Credit Account throughout liquidation.

These controls do not prevent every venue-local liquidation. They ensure that uncertainty, incomplete execution, or stale information cannot make the global portfolio appear safer than it is.