# Stability Pool ### What is Stability Pool? The Stability Pool provides liquidity to repay the debt of liquidated troves, ensuring that the total `wenUSD` supply remains fully over-backed. When a Trove is liquidated, an amount of `wenUSD` equal to its remaining debt is burned from the Stability Pool's balance to repay that debt. The entire collateral from the liquidated trove is then transferred to the Stability Pool. The Stability Pool is funded by users depositing `wenUSD` into it, known as **Stability Providers**. Over time, Stability Providers lose a proportional share of their `wenUSD` deposits while gaining a proportional share of the liquidated collateral. However, since Vaults are typically liquidated just below a 115% collateral ratio, Stability Providers are expected to receive collateral **worth more** than the debt they repay. ### Why should I be a Stability Provider? Here is a summary of the benefits of depositing `wenUSD` into the Stability Pool: * Liquidation gains - As a Stability Provider, you receive a portion of these liquidation gains. The more `wenUSD` you deposit, the larger your share of these gains. * Earn rewards - Stability Providers receive rewards in the form of `esWEN` tokens, the governance token of the system. * Support the system - By depositing `wenUSD`, you are providing stability to the system and helping maintain `wenUSD`'s peg to `$1`. This supports the overall health of the protocol. In general, depositing `wenUSD` into the Stability Pool can be a good way to earn rewards from participating in the system. ### How can I benefit as a Stability Provider from liquidations? Since liquidations happen when the collateral ratio drops just below 115%, you will likely make a profit whenever a Trove is liquidated. For example, * Alice has `100,000 wenUSD` in Stability Pool with a total of `1,000,000 wenUSD` * Bob's Trove with `500,000 wenUSD` minted and `285 wstETH` collateral is liquidated at `wstETH` price of `$2,000`, giving it a collateral ratio of `114% ((285*2,000)/500,000)` * Stability Pool will be reduced to `500,000 wenUSD` due to the liquidation but rewarded by Bob's `285 wstETH` which equals to `570,000 wenUSD` * Since Alice owns `50%` of the pool, her deposit will decrease by `50%` from `500,000` to `250,000 wenUSD`. In return, Alice gains `50%` of Bob's collateral which is 142.5 `stETH` * As a result, Alice's net profit is `142.5*2,000-250,000 = $35,000` {% hint style="info" %} Stability Provider can immediately withdraw the collateral received from liquidations and sell it to reduce their exposure to these assets. {% endhint %} ### How do I benefit as a Stability Provider from participants rewards? To benefit from participants rewards as a Stability Provider, first you need to open a Trove account. Then, mint `wenUSD` and deposit that into the Stability Pool. Once you make your deposit, you will immediately start earning a reward (in `esWEN`) in proportion to your deposit. `esWEN` reward is calculated based on the rewards schedule. The longer you provide stability and the more `wenUSD` you deposit, the more `esWEN` tokens you will earn as rewards. At any time, you can withdraw the rewards you have accumulated so far to your Ethereum address. ### How can I withdraw my deposit and rewards? Generally speaking, you can take out the `wenUSD` deposited into the Stability Pool or your rewards directly in the app **at any moment**. There is no minimum period that the funds must remain. However, withdrawals are briefly halted whenever there are Troves with collateral ratios under 115% that have not yet been liquidated. ### Is there any chance to lose money being a Stability Provider? While liquidations typically happen when the collateral ratio is well above 100%, liquidations below 100% can only occur during flash crashes or due to oracle failures. In this scenario, you could lose money as the collateral gained will be less than the deposit reduced. If `wenUSD` is trading above $1, liquidations may become unprofitable for Stability Providers even at collateral ratios higher than 100%. However, this loss is hypothetical since `wenUSD` is expected to return to `$1` peg, so the "loss" only materializes if you had withdrawn and sold the `wenUSD` at above `$1`. {% hint style="info" %} Please note that although the system is originated from [Liquity](https://liquity.org) and is diligently audited, losses for users due to a hack or bug can never be fully ruled out. {% endhint %} ### What happens if the Stability Pool is empty when liquidations occur? When the Stability Pool has no funds, the system uses a backup liquidation method called **redistribution**. In this situation, the system redistributes the debt and collateral from liquidated Troves to all the remaining Troves. The debt and collateral are redistributed proportionally based on how much collateral each recipient Trove has. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.wenprotocol.io/how-it-works/stability-pool.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.