Deleverage
Proactive Debt Reduction Without Liquidation Penalties
Getting liquidated sucks. The fees, the forced selling, the stress.
But what if you could reduce your debt before things get ugly? That's what deleveraging does. Sell some collateral, pay down debt, stay in control. No liquidation penalties. No keeper fees. Just a rational way to manage risk.
Even better: if you're using Ripe's stability pools, the protocol can automatically burn your GREEN or sGREEN to reduce your debt. Your own assets, used to protect your own position.
Quick Overview
What is Deleverage?
Deleveraging is the voluntary (or protocol-assisted) sale of collateral to reduce debt. Unlike liquidation, it happens before you reach the danger zone and carries no penalties.
Key Differences:
When it happens
Before liquidation threshold
After liquidation threshold
Who triggers it
You, delegated addresses, or third parties (when eligible)
Anyone (keepers)
Penalties
None
5-15% + keeper fees
Your control
You choose which assets
Protocol chooses for you
Remaining collateral
Maximized
Minimized by fees
When Can You Be Deleveraged?
Self-Deleveraging (Always Available)
You can always deleverage your own position:
Choose which assets to sell
Specify exactly how much debt to repay
No threshold requirements
No permissions needed
Third-Party Deleveraging (Redemption Zone)
When your position enters the redemption zone, others can help deleverage you:
Triggered when collateral value falls below redemption threshold
Third parties can initiate deleverage to restore your position health
Limited to the amount needed to return you to a safe LTV
Still no liquidation penalties applied
How Deleveraging Works
When deleveraging occurs, assets are processed in priority order:
Phase 1: Stability Pool Assets
Your assets in stability pools are used first:
GREEN deposits: Burned directly to reduce your debt
sGREEN deposits: Redeemed to GREEN, then burned
No slippage, no fees, no market impact
Most efficient form of debt repayment
Phase 2: Stablecoins and Other Collateral
After stability pool assets, remaining collateral is processed:
USDC, USDT, and other stablecoins transferred to Endaoment at 1:1 value
No liquidation discount — immediate dollar-for-dollar debt reduction
Other vault assets processed as needed
Choosing Specific Assets
You can specify exactly which assets to deleverage:
Example: Deleverage with Specific Assets
You have:
- 10,000 USDC ($10,000)
- 5 ETH ($15,000)
- 1,000 sGREEN ($1,000)
Debt: $12,000
You choose to deleverage with:
1. sGREEN first ($1,000 debt reduction)
2. USDC second ($10,000 debt reduction)
3. Keep all ETH
Result: $1,000 debt remaining, all ETH preservedUsing Underscore Vaults?
If you're depositing into Underscore's AI-powered vaults, you don't need to worry about deleveraging. The vault manages its own Ripe position — borrowing, collateral, deleveraging — all handled automatically. When you withdraw, the vault adjusts its position behind the scenes.
For details on how Underscore vaults interact with Ripe, see Underscore Protocol Integration.
Delegation for Deleveraging
You can authorize others to manage your position:
Available Permissions
canBorrow: Allows delegate to deleverage on your behalf (uses same permission as borrowing)
Trusted addresses can specify asset order and amounts
Protocol contracts (like Underscore) can deleverage for operational needs
Setting Up Delegation
Delegated addresses can:
Initiate deleverage when your position is at risk
Choose which assets to sell and in what order
Maintain your position health automatically
When to Deleverage
Don't wait for liquidation. Consider deleveraging when:
Market volatility increases
Your LTV approaches the warning zone
You want to reduce exposure to specific assets
You're rotating into different collateral
How Deleverage Fits In
Deleverage is one of several protective mechanisms, each activating at different risk levels:
Healthy Zone → Warning Zone → Redemption Zone → Liquidation Zone
| | | |
No action Can't borrow Redemption + Liquidation
needed more Deleverage active triggeredRedemption: GREEN holders can redeem your collateral at $1 (no penalty to you)
Deleverage: Your assets reduce your debt (no penalties, you choose which assets)
Liquidation: Forced sale with 5-15% fees (last resort)
Deleverage is always available for yourself. Third parties can help deleverage you once you enter the redemption zone. For the complete picture, see Liquidations.
Taking Control of Your Risk
Liquidation is a worst-case scenario. Deleverage is a tool.
Smart borrowers:
Monitor their position health
Set up delegation for automated protection
Use stability pools for instant debt reduction
Deleverage proactively rather than reactively
The protocol doesn't penalize you for managing your risk. It rewards it with zero-fee debt reduction using your own assets.
Stay ahead of the liquidation threshold. Stay in control.
For technical implementation details, see the Deleverage Technical Documentation.
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