Liquidation (Collateral Liquidation)

Definition

Liquidation occurs when a borrower's collateral value falls below the required threshold, triggering automatic sale of collateral to repay the loan and protect lenders.

Example

Risks to Consider

Related Terms

• Collateral (Loan Collateral)
• LTV (Loan-to-Value Ratio)
• Borrowing (DeFi Borrowing)
• Health Factor

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