The minimum vault debt, also called “dust” or “Debt Floor”, is the minimum possible debt of a Vault. When opening a vault, a user has to generate at least this amount in Dai. Otherwise, the transaction will fail. For example, if the minimum vault debt is 5,000 Dai, in order to open a vault a user must lock sufficient collateral to allow them to generate at least 5,000 Dai. This minimum exists in order to give the proper incentives to liquidate a undercollateralized position without risking the entire system, however Vaults which are under the Debt Floor and become undercollateralized will still be at risk of liquidation. Each Vault type has its own Debt Floor, determined by Maker Governance. Moreover, the Debt Floor applies to each individual vault, rather than to vaults in aggregate.
The minimum vault debt parameter also applies when paying back Dai. If the user tries to pay back an amount that will leave the total Dai debt of the vault below the Debt Floor but greater than zero, the transaction will fail and no Dai will be paid back. It is important to note that when a transaction fails, the user will still be charged a transaction (or gas) fee, even though the action did not complete.
If a user already has an open vault, and the new Debt Floor is above the total outstanding amount of Dai this user has, it will not be possible to draw or payback additional Dai, where the total amount of Dai generated remains below the Debt Floor, but above 0. In this instance, the user must generate enough Dai to take their total outstanding above the Debt Floor, or pay it back in full. However, the user will not be forcibly liquidated in case the user is still overcollateralized.
Keep up with the value of the current minimum value debt required in the Oasis Blog.