vaults

users mint mUSD by locking collateral into vaults. each vault has four functions: deposit/withdraw collateral, and borrow/repay mUSD.

vaults are overcollateralized debt positions containing a single form of collateral and the minted asset. collateralization ratios (c-ratios) are parameterized for each collateral type. for example, highly correlated vaults like USDC/mUSD will have a much lower c-ratio than less correlated pairings such as APT/mUSD.

if a user falls below the target c-ratio, they risk liquidation. liquidations can be performed by anyone, and the liquidator will receive a fee for processing the liquidation. the mirage team has written open-source software that anyone can run to be a liquidator. of course, you're always free to write your own liquidator as well or modify the existing code.

each vault is a digital asset token (NFT). this means vaults can be transferred between accounts, listed on a secondary marketplace, and are easily composed across other protocols. the gives users added flexibility for managing their position and allows other participants to take over positions at a fair market value. from a portfolio management perspective, users will be able to see their vaults from within their wallet.

be careful when transferring vaults. transferring to an unknown address could result in loss of funds. when you transfer a vault, your locked collateral is transferred as well.