Comment on page
Liquidation and Liquidity Theoretical
We require users to specify whether they want to use a lent asset as liquidity for borrowing.
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 the n subscript implies the specific token
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 Finterest protocol, we consider a user as underwater when they hit the liquidation point specified below:
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.
Let n = the token that is being borrowed and m = the token that the liquidator wants to seize from the borrower
Only the amount repaid will be taken from your balance so rest assured you are not being charged anymore than whats repaid.
- 2.Borrower hit liquidation point