<figure class="wp-block-image size-large"><img width="325px" height="183px" srcSet="https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/10/27065941/what-is-recovery-mode-375x211.webp 375w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/10/27065941/what-is-recovery-mode-662x372.webp 662w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/10/27065941/what-is-recovery-mode-768x432.webp 768w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/10/27065941/what-is-recovery-mode.webp 688w" sizes="(max-width: 425px) 150px, 450px" src="https://ll-blog-dev.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2023/10/27065941/what-is-recovery-mode.webp" alt="what is recovery mode" class="wp-image-4311"/></figure>



Solvency is a key feature of the <a href="https://www.thecoinzone.com/blockchain/explained-liquid-loans-defi-protocol-on-pulsechain" data-type="URL" data-id="https://www.thecoinzone.com/blockchain/explained-liquid-loans-defi-protocol-on-pulsechain" target="_blank" rel="noreferrer noopener">Liquid Loans protocol</a>.



Every <a href="https://www.thecoinzone.com/liquidloans/usdl-crypto" data-type="URL" data-id="https://www.thecoinzone.com/liquidloans/usdl-crypto" target="_blank" rel="noreferrer noopener">USDL</a> must be overcollateralized by PLS.



In order to ensure solvency, the <a href="https://www.thecoinzone.com/tradfi/what-is-collateral-ratio" data-type="URL" data-id="https://www.thecoinzone.com/tradfi/what-is-collateral-ratio" target="_blank" rel="noreferrer noopener">Total Collateral Ratio (TCR)</a> of the system must stay high.



When the TCR falls below a certain threshold, Recovery Mode kicks in.



Keep reading to learn what Recovery Mode is, and what it means for your Vault.



<h2 class="wp-block-heading tablecontent">What is Recovery Mode?</h2>



When the Total Collateral Ratio (TCR) of the system falls below 150%, recovery mode kicks in. 



The purpose of recovery mode is to increase the total collateral health of the ecosystem.



In Recovery Mode, it is not possible to:



<ul>
<li>Increase debt of existing vaults, by either reducing <a href="https://www.thecoinzone.com/liquidloans/the-collateral-surplus-pool/" data-wpil-monitor-id="1302">PLS collateral</a> or taking on new debt</li>



<li>Create a new vault with an Individual Collateral Ratio (ICR) of less than 150%</li>
</ul>



If your vault is 100% or less, your total collateral and total debt will be distributed to all existing vaults.



If your vault is between 100-110%, your vault will be liquidated normally using the Stability Pool.



If your vault is between 110-150%, your vault will be liquidated at 110% and your remaining PLS collateral will remain in your vault.



<h2 class="wp-block-heading tablecontent">How To Protect Yourself in Recovery Mode</h2>



The best way to protect yourself in Recovery Mode is to always keep your vault <a href="https://www.thecoinzone.com/liquidloans/110-percent-collateral-ratio" data-type="URL" data-id="https://www.thecoinzone.com/liquidloans/110-percent-collateral-ratio" target="_blank" rel="noreferrer noopener">well above 150% Individual Collateral Ratio</a>. 



This way, you will not be liquidated when the TCR of the ecosystem falls below 150%. 



If you’re less risk averse, you can keep your vault below 150%, but regularly monitor the TCR of the <a href="https://www.thecoinzone.com/pulsechain/what-influences-the-price-and-supply-of-usdl/" data-wpil-monitor-id="1095">Liquid Loans protocol and the price</a> of PLS.



It may also be smart to keep your USDL debt liquid, so that you can increase the ICR of your vault if you are approaching 150% and the TCR is approaching Recovery Mode levels.



<h2 class="wp-block-heading tablecontent">The Bottom Line</h2>



Recovery mode exists to ensure that USDL is always <a href="https://www.thecoinzone.com/defi/what-is-overcollateralization/" data-wpil-monitor-id="1921">backed by excess collateral</a>.



It initiates at 150% TCR, and reduces liquidation requirements and tightens lending conditions. 



As long as you maintain a collateral ratio above 150%, and monitor the TCR of the system regularly, you do not have to worry about Recovery Mode.

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ALERT! You Must Know THIS About Recovery Mode (Save Yourself)

The recovery mode of the <a href="https://www.thecoinzone.com/defi/defi-yield-protocol/" data-wpil-monitor-id="379">Liquid Loans protocol</a> ensures that USDL is overcollateralized during a market downturn. Read more to learn how it works and what it means for you!