Docs
Liquidations
How under-collateralized positions are unwound.
Liquidations keep the protocol solvent. If a position's health factor falls to 1.0 or below — because collateral fell or debt grew — it becomes eligible for liquidation.
The mechanism
- Keepers repay a portion of the outstanding USDG debt on behalf of the borrower.
- In return they seize an equivalent value of collateral plus a liquidation bonus (incentive).
- This continues until the position's health factor is restored above
1.0.
Avoiding liquidation
Monitor your health factor, keep utilization moderate, and repay early during volatility. Because Stock Tokens trade 24/7, so do liquidations — there are no market-closed gaps to hide risk.