If you find yourself in a situation where the price of your collateral is dropping or you want to reduce risk for any other reason, you can do it as follows.
Maintain Sideline Assets
Maintain access to readily available emergency funds or assets to pay back Dai or add collateral.
Even if your assets are owned under a different wallet, you can always pay back Dai or deposit collateral from any wallet.
How to reduce risk from a different wallet
Assess the assets that you have in your wallet
If you do not have Dai or your the same token that you are using as collateral in your wallet (eg. ETH) go to an exchange (we are using Uniswap in the example)
Navigate to the Vault that you want to interact with. Oasis.app/borrow/(your Vault number)
Decide if you want to deposit collateral or payback Dai.
Enter the amount of Dai or Collateral that you want to deposit or pay back.
Check the UI where it says “after” under “collateralization ratio” to double check that the amount you are depositing or paying back will put you at a collateralization ratio that you deem to be safe.
Unwind your Vault buy selling collateral
Unwinding is when some collateral is withdrawn from the Vault and sold for Dai, the Dai is then used to pay down the Vault's generated Dai balance. Repeat the process until the Liquidation Price is a comfortable number.
When done manually, this technique temporarily puts the Vault in a riskier position until Dai is paid on the balance. This is because collateral is being withdrawn, which increases the Liquidation Price.
Set a personal rule to unwinding the Vault if the collateral price falls below a certain level or takes a sharp downturn. This may act as an additional buffer.
Some services will offer Vault unwinding for a nominal fee.
Thank you for leaving a rating!
Did you find this article helpful?
3 out of 3 people found this article helpful so far