Liquidation

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Liquidation

Borrowers must stay below the liquidation threshold of the collateral supplied or they will suffer liquidation. Upon liquidation, the borrower’s new loan amount will be reset to match the “Max LTV”, based on the existing collateral amount before the auction.
The difference between the old loan and the new loan will be considered Bad Debt. To offset the bad debt, a portion of the borrower's supply will be put up for auction with a 10% bonus incentive for liquidators. The liquidation opportunities will be available to those who run liquidation bots, and anyone who is able to provide a Bad Debt asset will be able to participate in the auction to collect the collateral with the 10% added bonus.
Liquidation is triggered when the following is true:
Following is the formula for the Bad Debt amount ($) when liquidation is triggered (the formula assumes LTV ≤ Liquidation Threshold):
*Origination Fee is deducted from collateral after liquidation is triggered.
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Max liquidation amount is the following:
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Parameters examples

Asset
Max LTV
Liquidation Threshold
ICX
0.5
0.65
USDS
0.5
0.65
IUSDC
0.5
0.65
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Borrowing

Interest rate model

Last modified 2mo ago

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