Vee.Finance | V2
Liquidation is a process that occurs when a borrower's Borrow Limit Used goes over 100% 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, 50% of a borrower's debt is repaid and that value + liquidation fee is taken from the collateral available, so after a liquidation that amounts liquidated from your debt is repaid.


When Borrow Limit Used is over 100%(Liquidation Line), a liquidator will be able to call the liquidation contract to use part of your collateral to pay your debt. After the liquidation, your Risk Rate shall be below 100%. If in any case, it drops above 100% again due to further price fluctuation, the liquidation process will happen again.
For example, if you have supplied 2,000 USDT and your borrow in AVAX is worth $1,000. When liquidation happens due to the increase of the AVAX price, The liquidator will exchange his AVAX for your collateralized USDT until your borrow limit used is below 100%.
To avoid liquidation you can raise your risk rate by supplying more collateral assets or closing position to repay your borrow.
Last modified 13d ago
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