Accrued stability and liquidation fees are deposited in two funds. The split is determined by the developer fund split.
The role of the stability fund is to be a liquidator of last resort. If the price of the outstanding kUSD
is greater than the XTZ
value locked in the Oven
s then a rational economic actor would not liquidate, and the Oven
is then considered underwater. This event should not occur since it is unlikely that Oven
values would go from undercollateralized to underwater fast enough that rational actors would not liquidate. However, in some sort of systemic black swan event, the stability fund acts as a powerful counter-balance and can liquidate underwater Oven
s to restore collateralization (and thus stability) to the system.
The developer fund is a discretionary fund used to fund future developments to Kolibri. Distributions are determined via a planned governance mechanism.