What is Liquidation?
Liquidation occurs when your borrowed position's collateral falls below the required threshold. The protocol sells your collateral to repay the debt.
How to Avoid Liquidation
- Monitor your health factor
- Use less volatile collateral
- Don't borrow near the maximum
- Set up alerts for price movements
Liquidation Penalty
Most protocols charge a liquidation penalty (typically 5-15%) on top of repaying the debt.