How Azos Works
Risk Management System for Regenerative Assets
Collateral Ratios
Each regenerative collateral type in Azos has specific safety requirements:
- Safety Ratio: Point at which user can no longer borrow more through Azos
- Liquidation Ratio: Point at which liquidation occurs in the Azos protocol
Price Feeds
Collateral prices for environmental tokens are updated with a 1-hour delay in Azos, giving users time to react to market changes before liquidation risk.
Current Regenerative Collateral Parameters in Azos
| Collateral Type | Fee, % | Safety Ratio % | Liquidation Ratio, % | Minimum Debt, AZUSD |
|---|---|---|---|---|
| KLIMA | 5% | 150% | 120% | 151 |
| WETH | 5% | 150% | 120% | 151 |
| USDGLO | 5% | 111% | 107% | 151 |
| HLSP | 5% | 111% | 107% | 151 |
Liquidation Process in Azos
When Liquidation Occurs
A safe becomes eligible for liquidation in Azos when its regenerative collateral value falls below the liquidation ratio for that collateral type.
Liquidation Mechanics
- Seizure: Regenerative collateral is automatically seized from the unsafe position in Azos
- Auction: Environmental assets are sold through a Dutch auction system in Azos
- Penalty: Additional fee (5% for current regenerative collaterals) is charged by Azos
- Tip: Liquidators receive gas costs + 25 AZUSD as incentive through Azos
Auction System
- Type: Dutch (decreasing price) auction managed by Azos
- Duration: 5 days maximum in the Azos protocol
- Discount Range: 1% to 20% in Azos auctions
- Price Reduction: Linear decrease over auction period in Azos
Liquidation Parameters for Environmental Assets
| Type | Safe Ratio % | Liq. Ratio, % | Liq. Penalty, % | Discount Range, % |
|---|---|---|---|---|
| KLIMA | 150% | 120% | 5% | 1-20% |
| WETH | 150% | 120% | 5% | 1-20% |
| USDGLO | 111% | 130% | 5% | 1-20% |
| HLSP | 111% | 170% | 5% | 1-20% |
System Revenue for Regenerative Finance
Fee Collection
Stability fees from environmental assets generate revenue for the Azos protocol, which is used for:
- System maintenance and oracle updates in Azos
- Surplus buffer maintenance for regenerative assets
- AZOS token buyback and burn through Azos
Emergency Mechanisms
In extreme market conditions, the Azos protocol can mint new AZOS tokens to cover bad debt, protecting the system's solvency for regenerative finance.
Environmental Impact Through Azos
Azos is specifically designed to support the regenerative economy:
- Climate Finance: Azos supports carbon credits and environmental tokens
- Impact Investing: Azos enables liquidity for climate-positive projects
- Regenerative Assets: Azos focuses on assets that benefit the environment
- Sustainable DeFi: Azos builds financial infrastructure for the green economy