> For the complete documentation index, see [llms.txt](https://docs.hann.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.hann.finance/mechanics/deep-dives/trove-concepts.md). # Trove concepts How a Trove holds collateral and USDHN debt, how ownership works, and what collateral branches share. A **Trove** is a collateralized debt position: it holds one branch's collateral and records the USDHN owed against it. Each Trove has an ID and an ERC-721 ownership token, the **Trove NFT**. One wallet can own multiple Troves and manage their collateral, debt, and interest rates separately. ## What a Trove records | Record | Role | | ------------------------- | ------------------------------------------------------------------------------------------------------ | | Collateral | The amount held for the position, including pending redistribution gains. | | USDHN debt | Recorded debt, accrued interest, redistributed debt, and batch management fees for a batched position. | | Status | Whether the position is `active`, `zombie`, `closedByOwner`, or `closedByLiquidation`. | | Ownership and permissions | The NFT owner and the managers authorized to adjust collateral, debt, or interest rates. | | Interest rate | The position's annual rate, or the rate applied by its interest batch manager. | | Branch | The collateral token, oracle, pools, and collateral-ratio rules that apply to the position. | Opening a Trove deposits collateral and mints USDHN. Adding collateral, withdrawing it, borrowing more, and repaying change the position through on-chain transactions. Full repayment closes the Trove and returns its collateral. A redemption can reduce both collateral and debt while leaving the Trove open. The loan has no fixed maturity. Interest continues to accrue until the debt is settled or the branch shuts down. [Borrowing and liquidation](/protocol/borrowing-and-liquidation.md) gives the opening, adjustment, and closing steps. ## Position-level collateral Liquidation eligibility is calculated from the current collateral and debt of that Trove. The protocol does not automatically take unrelated wallet balances or move collateral from another Trove to rescue it. Raising the collateral ratio requires a collateral deposit or USDHN repayment transaction. This position-level arrangement allows one wallet to hold Troves with different collateral amounts, debt levels, and interest rates. Each position has its own liquidation price. Its NFT and events identify the owner and the history of changes. ### Trading terms and Trove mechanics | Trading term | Trove concept | Settlement mechanics | | ------------------ | --------------------------------- | -------------------------------------------------------------------------------------------------------------- | | Isolated margin | Collateral recorded for one Trove | Collateral backs a USDHN loan. Wallet balances are not automatically added to the position. | | Maintenance margin | Minimum collateral ratio, `MCR` | The branch sets the ratio at which its Troves become eligible for liquidation. | | Liquidation price | Collateral price at `CR = MCR` | The protocol checks its branch oracle price, which can differ from a spot-market price. | | Borrowed asset | USDHN debt | Repayment burns USDHN units. Buying those units has a market cost. | | Deleveraging | Reduce debt or add collateral | On-chain actions change the position. Obtaining USDHN through a swap also incurs the swap's fees and slippage. | A Trove creates a stablecoin debt obligation. There is no perpetual-futures profit-and-loss settlement in this position. ## Collateral branches A **collateral branch** groups positions that use the same collateral and rules. Each branch has its own `TroveManager`, `BorrowerOperations`, collateral pools, `StabilityPool`, price feed, and sorted Trove list. | Parameter | What it controls | | --------------------- | -------------------------------------------------------------------------------------- | | `MCR` | The individual Trove's liquidation threshold. | | `BCR` | The additional collateral-ratio buffer for opening and adjusting batched Troves. | | `CCR` | The branch-wide collateral ratio used to restrict borrowing, withdrawals, and closure. | | `SCR` | The branch-wide collateral ratio that can trigger shutdown. | | Liquidation penalties | The collateral used for the Stability Pool and redistribution liquidation paths. | Collateral types have different price behavior, oracle dependencies, and market liquidity. Branch-specific rules let their positions use different collateral-ratio thresholds and liquidation charges. Check the parameters for the branch that holds the position. ## Shared accounting and market exposure Positions have separate collateral records, but they participate in shared branch accounting: * **Liquidation redistribution:** if the Stability Pool cannot offset all liquidated debt, the remaining debt and allocated collateral are redistributed to other live Troves in that branch. A Trove's debt and collateral can increase without its owner making a new deposit or borrowing transaction. * **Branch collateral ratio:** a fall in the branch's total collateral ratio can restrict adjustments and closure, including for a Trove whose own CR remains above MCR. * **Shutdown:** the branch stops new borrowing and ordinary adjustments after its shutdown threshold is breached or a qualifying oracle failure occurs. Full repayment and closure remain available. * **Redemptions:** USDHN holders can repay debt in selected Troves in exchange for collateral. The Trove's collateral and debt both decrease. Its interest-rate position affects redemption order. [Redemptions](/mechanics/deep-dives/redemptions.md) describes the selection and settlement. USDHN is shared across branches. Its market price can move above or below $1, changing the cost of acquiring tokens for repayment. Oracle and contract failures can affect many positions. Reduced market liquidity increases the cost and slippage of swaps used to repay or reduce leverage. ## Debt and the repayment path The USDHN balance in a wallet and the debt in a Trove are separate records. Spending borrowed USDHN leaves the debt unchanged. To close the position, obtain enough USDHN to repay the latest debt, including interest, fees, and redistribution. Track the current collateral ratio and liquidation price after each debt or collateral change. Interest can raise debt and move the liquidation price even when the collateral price is unchanged. [Collateral ratio and repayment](/mechanics/deep-dives/cdp-safety.md) derives these relationships. Leveraged positions use borrowed USDHN to acquire more collateral. Closing that position requires reversing the borrowing and collateral purchases or using the supported collateral-close flow. [Looping and leverage](/mechanics/deep-dives/looping-and-leverage.md) follows the asset movements and unwind. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## 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. 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