Skip to content
Blotter

Start here

Overview

What Blotter is, who it is for, and what it is not.

Blotter is a shared liquidation backstop for Stock Token lending, built on Robinhood Chain. It absorbs liquidations when they happen and sells the seized collateral later, during real market hours. The short version: absorb the liquidation, sell at the bell.

What Blotter is

Blotter is a pool of USDG whose only job is to be the liquidator of last resort for loans backed by Stock Tokens. A Stock Token is a token that tracks the price of a listed stock. Depositors fund the pool and receive a transferable ERC-4626 share. When a loan becomes liquidatable on an integrated lending market, the pool repays the debt in USDG and receives the collateral, plus the liquidation bonus that the lending market pays to any liquidator.

The difference with an ordinary liquidator is what happens next. An ordinary liquidator sells the collateral in the same transaction, into whatever on-chain liquidity exists at that moment. Blotter does not sell. It holds the collateral in a warehouse, values it at the oracle price, and unwinds it only while the underlying stock market is open, in small tranches sized against the trading venue. Selling pressure that would have landed in one minute is spread over a session.

The reason this matters is specific to Stock Tokens. The tokens trade around the clock, but the price feed follows a market that closes every evening and every weekend. Liquidations therefore arrive in synchronized bursts at the open, into thin on-chain pools. The Monday problem describes that failure in detail. Blotter exists to take the other side of that burst with capital that is not forced to sell immediately.

The mechanism in one sentence

The pool repays liquidatable debt in USDG, keeps the seized Stock Tokens instead of dumping them, sells them in capped tranches during market hours, and passes the net premium to depositors, after a share for $BLOT stakers and a buy and burn.

The full sequence is in Mechanism. The life of a single liquidation is in Liquidation flow.

Who it is for

Depositors

Depositors supply USDG. They are exposed to the result of the pool: liquidation bonuses collected, minus the slippage paid when unwinding, minus or plus the change in value of the inventory while it is held. That result can be negative. Depositors receive 70% of the net premium when it is positive. Read Pool shares and Risks before anything else.

Lending markets and lenders

Lending markets that accept Stock Tokens as collateral benefit from a liquidator that does not depend on instantaneous AMM depth. Liquidations clear closer to the oracle price, and less collateral is sold into a falling on-chain price. Because Morpho Blue-style liquidations are permissionless, a lending market does not need to change anything for Blotter to act on it. See Integrations.

Stakers

Holders who stake $BLOT provide first-loss capital. If the pool takes a loss, the stake absorbs it before depositors do. In exchange, stakers receive 20% of the net premium. Staking is the riskiest position in the system by construction.

What it is not

  • Not insurance. Blotter does not cover the bad debt of lenders. If a loan's collateral is worth less than its debt at the open, the uncovered part remains bad debt of the lending market. No claim can be filed with Blotter by anyone.
  • Not a lending market. Blotter makes no loans, sets no interest rates and holds no borrower positions. It only calls the liquidation function of existing markets.
  • Not a DEX. Blotter operates no trading venue. It sells inventory on existing AMMs.
  • Not a market maker. Blotter quotes no prices and takes no discretionary positions. It only acquires inventory through liquidations and only sells it under published rules.

Limits to keep in mind

The pool has finite USDG. When capacity runs out, the remaining liquidations go to ordinary liquidators, as they do today. The pool also carries price risk: inventory that is not sold by the close is held overnight or over the weekend, and a gap on that inventory larger than the premium already collected is a loss. The loss burns staked $BLOT first, then reaches depositors. No audit has been published, and an audit would not remove these risks.