# Liquidations Liquidation is a critical process that safeguards lenders when a borrower’s health factor dips below 100%. This typically occurs if the collateral’s value no longer covers the debt, often due to price fluctuations. The collateral-to-debt ratio is captured by the health factor, based on each collateral asset’s liquidation threshold (LT). Liquidations rely on oracle price feeds and are carried out by liquidator bots, both internally and by third parties. During liquidation, a penalty is applied to the collateral’s value, creating an incentive for swift execution. A portion of the seized collateral compensates liquidators for their service. If the collateral’s quoted value during liquidation cannot fully cover the debt, the shortfall—known as bad debt—is socialized among all pool lenders. Liquidation is permissionless and open source, enabling anyone to run a liquidator bot. For more information, refer to [Running a Liquidator Bot](/echelon/integrations/running-a-liquidator-bot.md). --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.echelon.market/echelon/security/liquidations.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.