🌊Liquidations

A critical process, which is triggered when a borrower's health factor falls below 100% due to their collateral value not adequately covering their loan or debt value.

This might happen when the collateral decreases in value, or the borrowed debt increases in value relative to each other. This collateral-to-loan value ratio is reflected in the health factor.

Liquidations are triggered by Oracle price feeds and managed by internally run liquidator bots. A liquidation penalty is applied to the value of the collateral during liquidation, serving both as an incentive to execute the liquidation process and as a source of revenue for the protocol