Auto Liquidation
Automated liquidation triggered by smart contracts when a position undercollateralizes.
Automated liquidation triggered by smart contracts when a position undercollateralizes.
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Sep 2026 · Показник свіжості: 50%
Що таке Auto Liquidation?
Automated liquidation triggered by smart contracts when a position undercollateralizes.
- Category
- concept
- Type
- Authority Node
- Джерела
- 1
When a borrower's position health (collateral value / debt) drops below a liquidation threshold — due to price moves or interest accrual — the protocol allows liquidators to repay part of the debt in exchange for the collateral, often at a
Auto-liquidation is what keeps over-collateralized lending systems solvent. It creates predictable risk for borrowers (who can lose collateral in volatile markets) and a profit incentive for liquidators to keep markets efficient. Understand
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Пов'язані
1. What Is Auto-Liquidation
Auto-liquidation is the automatic closing of a leveraged position when its collateral falls below a required ratio, executed by a protocol to protect lenders from losses. It is a core risk-management mechanism in DeFi lending and margin trading.
2. How It Works
When a borrower's position health (collateral value / debt) drops below a liquidation threshold — due to price moves or interest accrual — the protocol allows liquidators to repay part of the debt in exchange for the collateral, often at a discount. The position is then partially or fully closed, restoring the system's solvency. Liquidation prices are usually displayed in advance so users can manage risk.
3. Why It Matters
Auto-liquidation is what keeps over-collateralized lending systems solvent. It creates predictable risk for borrowers (who can lose collateral in volatile markets) and a profit incentive for liquidators to keep markets efficient. Understanding liquidation mechanics is essential for anyone using leverage in DeFi.
4. Key Facts
- Liquidation bonuses typically range 5-10% of collateral
- Stablecoin loans often liquidate at 110-120% collateral ratios
- Flash-loan liquidators can act instantly and atomically
- Depeg events can trigger cascading liquidations
5. Related Concepts
- collateral-ratio
- liquidation-price
- staking-derivative
- decentralized-exchange
Frequently Asked Questions
What is Auto Liquidation?
Automated liquidation triggered by smart contracts when a position undercollateralizes.
How does Auto Liquidation work?
Auto-liquidation is the automatic closing of a leveraged position when its collateral falls below a required ratio, executed by a protocol to protect lenders from losses. It is a core risk-management mechanism in DeFi lending and margin trading. When a borrower's position health (collateral value /
Why does Auto Liquidation matter in Web3?
- liquidation-price - staking-derivative - decentralized-exchange