Liquidation and Liquidity Theoretical

Enter Markets (Use fTokens as collateral)

We require users to specify whether they want to use a lent asset as liquidity for borrowing.

How does liquidity work?

Every open borrow is subject to be liquidated by a third party (that is, anyone) if the underlying value of the collateral locked in relation to the current value of the borrowed assets, falls under a certain level.

The following values are in the user's balances

NOTE: fTokenSupplied_n references fTokens supplied in entered markets.

Note the n subscript implies the specific token

totalCollatDollarMantissa

totalDebtDollarMantissa

Zero Liquidity Point

Liquidation

Liquidation is a process in which one user repays the debt of the a borrower and essentially purchases some of the borrowers collateral at a discounted rate relative to the amount of repayment. On the Finny protocol, we consider a user as underwater when they hit the liquidation point specified below:

Liquidation Point

When you hit liquidation point, a user may repay your debt until:

Liquidation/Repayment of a borrower's debt happens on an individual token and not for all assets at once.

Discounted Collateral Purchase/Seizure

Let n = the token that is being borrowed and m = the token that the liquidator wants to seize from the borrower

A portion of seized collateral gets sent to the #Reserves and another portion to the liquidator

Liquidation Checks

  1. NOTE:

Only the amount repaid will be taken from your balance so rest assured you are not being charged anymore than whats repaid.

  1. Borrower hit liquidation point

Last updated