Position Health & Liquidations

Position Health

Each pair has a configured Maximum Loan-To-Value (LTV). Over time, as interest is capitalized, borrowers must add more collateral or repay a portion of their debt. Otherwise they risk having their position become unhealthy. To determine a borrower’s LTV we use the value of the collateral and the value of the fTokens.
LTV=BorrowShares×SharePriceCollateralBalance/ExchangeRateLTV=\frac{BorrowShares \times Share Price}{CollateralBalance / ExchangeRate}
Share Price is the price of 1 fToken in Asset Token Units (i.e. AssetToken:fToken ratio) Exchange Rate is the price of 1 Asset Token in Collateral Units (i.e. Collateral:Asset ratio)

Liquidations

When a borrowers LTV rises above the Maximum LTV, any user can repay the debt on the borrower's behalf and receive an equal value of collateral plus a liquidation fee. The liquidation fee is immutable and defined at deployment. By default the value is set to 10% and can be accessed by calling the liquidationFee() view function on the pair. The configured Maximum LTV can be found by calling the maxLTV() function on the pair.
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Position Health
Liquidations