Liquidation

Through oracles, we compute your current Health Factor as follows:

Once your Health Factor drops to zero, your account becomes vulnerable to liquidation.

If your account is at risk of liquidation, our Third Party Liquidators may repay up to 50% of your loans by selling the corresponding amount of Collateral.

In doing so, these liquidators will earn an extra 12% on the liquidated sum as a bounty to fortify our protocol. For information on becoming a liquidator, please see the liquidation hackathon section.

Liquidation Example

Suppose Bob supplied $10,000 in USDC and borrowed TON, equivalent to $6,500. If the value of TON increases by 10%, its worth becomes approximately $7,150, rendering Bob's account susceptible to liquidation.

A liquidator then repays 20% of the TON loan, which is $1,430. They take $1,430 from Bob's USDC collateral to cover the TON and earn an additional bonus of 12% (or $171.6) for executing the liquidation.

As a result:

• Bob now possesses $8,398.4 in USDC, calculated as $10,000 - $1,430 - $171.6.

• His TON borrow balance is now $5,720, computed as $7,150 - $1,430.

• The liquidator spent $1,430 in TON but gained $1,630.6 in USDC.

Subsequently, Health Factor increases from -2,1% to 2.2%.