Liquidation Mechanics
When a borrower's health factor drops below 1.0, anyone can liquidate their position. The liquidator repays part of the debt and receives collateral at a discount (the liquidation bonus).
⚡ Crash the Price — Watch the Liquidation
📦 Collateral: 10 ETH
💰 Debt: 20,000 USDC
🎯 Liquidation Threshold: 82.5%
🏷️ Liquidation Bonus: 5%
Health Factor
1.24
Status
Safe
Liquidator Profit
—
Remaining Collateral
10 ETH
Liquidation Step-by-Step
1
Price Drops
ETH price falls, reducing collateral value
→
2
HF < 1.0
Position becomes liquidatable
→
3
Liquidator Repays
Pays up to 50% of debt (close factor)
→
4
Seize Collateral
Receives collateral + 5% bonus