Liquidations can happen to both LPs and traders on the platform: LPs at a C-ratio of 200% and traders when their account C-ratio falls to 125%. If C-ratio falls below these thresholds, users (liquidators) will be able to call a liquidator function.
If a trader’s or minter’s (LPs) account is below minimum C-ratio, anyone can pay down the liabilities. In turn for paying down margin, the liquidator will receive 105% of the value of their tokens back. This capital is taken from the collateral of the account that is being liquidated. Liquidations remain possible until the C-ratio of the defaulting account returns to the initial collateralization ratio set by the protocol or there is no more collateral in the account.
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