Liquidation
Last updated
Last updated
The Liquidation Mechanism is used to protect the rights and interests of the lenders and the stability of the protocol. It is fully on-chain, decentralized, and public with incentives. Liquidation is categorized as Full Liquidation and Half Liquidation based on the value of the collateral.
The Liquidation Threshold is the maximum acceptable LTV ratio for a loan during its lifetime. The Liquidation Threshold is 0.8 for a non-stablecoin pair's loan, a loan with any non-stablecoin being a collateral or borrowing token while the ratio is 0.925 for the stablecoin pair's loan, a loan with both collateral and borrowing tokens being stablecoins.
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