before liquidation, your LLAMMA position is only srfxETH, and 0 crvUSD. during liquidation, the arbitrageur.

09 May 2023, 13:15

before liquidation, your LLAMMA position is only srfxETH, and 0 crvUSD. during liquidation, the arbitrageur 1. swaps in USDC or USDP or USDT or TUSD into the stablecoin pools > swaps out crvUSD 2. takes crvUSD and goes to LLAMMA where your collateral exist (but is in soft liquidation mode) 3. swaps crvUSD in swaps out sfrxETH from LLAMMA. now you're being liquidated. you have less dfrxETH (collateral) and more crvUSD. 4. sells sfrxETH for whatever and closes the arb loop. you cannot withdraw as long as you're being liquidated. you have two options: wait for full liquidation (0 sfrxETH and position is only crvUSD) and withdraw only in crvUSD, swap it out to a stablecoin of your choice, or wait for de-liquidation: during de-liquidation, the arbitrageur: 1. acquires sfrxETH from god knows where (up to the arbitrageur) 2. goes to LLAMMA, swaps in sfrxETH > swaps out crvUSD. your position is now being de-liquidated. you now have more sfrxETH and less crvUSD. 3. takes crvUSD that was swapped out in the previous step and goes to the plain pool. Then swaps it out for stablecoin of choice. to close the arb loop. each of the steps requires the arbitrageur to make profit (else liquidations will not work), and that profit comes from the user's position that is being liquidated.