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Liquidation

What is liquidation?

Loan liquidation is a process of loan termination. Typically, it can occur in two cases:
  • When the Health factor is below 1, the Lender can manually trigger Oracle Liquidation.
  • When the borrower fails to repay the loan before the deadline.
The Lender must have the specified L NFT bond, while the borrower must have the underlying B NFT bond to claim the remainder from the liquidation.

Liquidate and swap

The difference between ordinary liquidation and the Liquidate and swap feature
The Liquidate and Collateral Swap functions allow users to swap the borrower’s collateral (ADA) for the initial token the lender has lent. In the event of a possible liquidation, the user can initiate the Liquidate function on the Dashboard tab.
The confirmation window gives the Liquidate and Swap option. Confirming the transaction results in swapping the collateral through a DEX and sending it back to the user’s wallet.
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What is liquidation?
Liquidate and swap