Liquidations

When the collateral ratio (CR) of your Trove falls below 110%, it triggers liquidation. In such cases, borrowers forfeit their collateral as their debt is paid off by liquidators through the liquidation process. This means that borrowers cannot retrieve their collateral by repaying their debt.

A liquidation results in a net loss of 9.09% (= 100% * 10 / 110) of the collateral's value.

In event of liquidation, the Liquidation Reserve charged when you open a trove and draw a loan will be sent to the liquidator as to compensate the gas cost of liquidation. Read more about liquidation reserve here.

During Recovery Mode, if a Trove is liquidated and the Stability Pool has insufficient funds to cover the debt, every borrower will receive a portion of the liquidated collateral and debt as part of a redistribution process. This means that the collateral and debt of your Trove may increase without your intervention if other borrowers' Troves are liquidated and the Stability Pool is insufficient to cover the debt.