Liquidation
A liquidation is a process that occurs when a borrower's current LTV goes higher than liquidation LTV due to their collateral value not properly covering their loan/debt value. This might happen when the collateral decreases in value or the borrowed debt increases in value against each other.
In a liquidation, up to 50% of a borrower's debt is repaid and that value + liquidation fee is taken from the collateral available, so after a liquidation that amount liquidated from your debt is repaid.
Check out your position situation at below section, keep your Current LTV lower than your Liquidation LTV.
Current LTV ratio refers to the ratio of the user's current loan value to the market value of all collaterals.
Current LTV = ∑(Borrow Amount × Borrow Asset Price) / ∑(Collateral Amount × Collateral Price)
Max LTV refers to the ratio of the user's current 90% borrowing capacity to the market value of all collaterals.
Set aside 10% to prevent your collateral assets from being liquidated due to large price fluctuations.
Max LTV = 90% x ∑(Collateral Amount x Collateral Price x Collateral Factor) / ∑(Collateral Amount x Collateral Price)
Liquidation LTV refers to the ratio of the user's current 100% borrowing capacity to the market value of all collaterals.
Liquidation LTV = 100% x ∑(Collateral Amount x Collateral Price x Collateral Factor) / ∑(Collateral Amount x Collateral Price)
The liquidation penalty (or bonus for liquidators) depends on the asset used as collateral. You can find every assets' liquidation fee in the risk parameters section.
Sure! An example here:
Bob deposits 10,000 USDC (CF=90%) and borrows 2 ETH at 4,000 USDC/ETH price.
If ETH price goes higher as 4,500USC/ETH, Bob’s current LTV reaches the liquidation LTV, then his loan will be eligible for liquidation.
A liquidator can repay up to 50% of a single borrowed amount = 1 ETH.
In return, the liquidator can claim a single collateral which is USDC (8% bonus).
The liquidator claims 1.08 x4500 USDC by repaying 1 ETH.
To avoid liquidation you can lower your current LTV by depositing more collateral assets or repaying part of your loan.
You should be mindful of the stablecoin price fluctuations due to market conditions and how it might affect your current LTV. For example, the market price of USDC 1.00 might not equal exactly USD 1.00, but for example USD 0.95. The price fluctuations of stablecoins, like any assets, affects your current LTV. You can find more details of price oracles HERE.
Coslend sets user's current 90% borrowing capacity as "Max" at front-end, set aside 10% to prevent your collateral assets from being liquidated due to large price fluctuations.
Professional users can ignore this limit, and borrow as your wish by entering a larger amount.
When an asset is used as collateral for borrowing, the maximum withdrawal amount is limited. To prevent your collateral assets from being liquidated due to taking out too many assets.
Max Borrow represents the amount of a given asset that can be borrowed under 90% of the current borrowing capacity. Set aside 10% to prevent your collateral assets from being liquidated due to large price fluctuations.
Max Borrow = 90% x ∑(Collateral Amount×Collateral Price x Collateral Factor) / Borrow Asset Price
Last modified 1yr ago