# Recovery Mode

Bit Protocol incorporates a Recovery Mode to ensure the system's stability during periods of high volatility or when the overall health of the platform is at risk. It is a crucial mechanism that acts as a safeguard during times of heightened financial stress or systemic risk. By adjusting operational parameters based on the overall health of the platform, Bit Protocol ensures its resilience and long-term stability. This section explains the Recovery Mode's functionality, its triggering conditions, and its impact on the ecosystem.

### **Recovery Mode Triggers and Functionality**  <a href="#recovery-mode-triggers-and-functionality" id="recovery-mode-triggers-and-functionality"></a>

* **Global Total Collateral Ratio (GTCR)**: Recovery Mode is activated when the GTCR falls below a threshold of 180%. The GTCR is a measure of the overall health of the system.

$$
GTCR= 
∑Debt in BitUSD∑Collateral Value in USD
​
 ×100%
$$

* **Restrictions on Vaults**: When Recovery Mode is active, certain operations are restricted to prevent actions that might further decrease the GTCR.
* **Impact on Borrowing**: New BitUSD can only be minted if it improves the collateral ratio of an existing vault or if a new vault is opened with a collateral ratio greater than or equal to 180%.
* **Exiting Recovery Mode:** An improvement in GTCR leads to the deactivation of Recovery Mode once the GTCR rises above the set threshold of 180%.

### **Liquidation Process in Recovery Mode** <a href="#liquidation-process-in-recovery-mode" id="liquidation-process-in-recovery-mode"></a>

* **Modified Liquidation Criteria**: In Recovery Mode, vaults with a collateral ratio below the GTCR are subject to liquidation even if the collateral ratio is above 150%.
* **Liquidation Mechanics**: The specifics of liquidation in Recovery Mode vary based on the individual collateral ratio (ICR) of the vaults and the status of the Stability Pool.

If ICR\<GTCR and SP BitUSD≥Vault Debt, then Liquidate\


* **Impact on Liquidations:** In Recovery Mode, vaults with collateral ratios below GTCR are liquidation-prone. A ratio over 180% avoids liquidation, with losses capped at 120% of collateral.

### **Strategies for Users in Recovery Mode** <a href="#strategies-for-users-in-recovery-mode" id="strategies-for-users-in-recovery-mode"></a>

* **Maintaining High Collateral Ratios**: Users are encouraged to maintain collateral ratios above the GTCR to avoid liquidation.
* **Active Monitoring**: Users should actively monitor the status of their vaults, especially in volatile market conditions to ensure they are not prone to liquidation.

