Liquidations
When a loan is closed for you, what happens, and how to avoid it.
The liquidation line
Every coin's liquidation line sits 15 points above its loan to value limit. At a 25% limit the line is 40%. When your loan to value reaches the line, because the coin fell, the loan is liquidated.
What happens
Enough of your locked coins are sold to repay the SOL you borrowed, the interest and the liquidation fee. Anything left after that is yours.
The coin cap keeps each coin's total lending small next to its pool, so a liquidation can be sold without crushing the price.
How far a coin can fall
If you borrow the full limit, the coin can fall this far before liquidation:
| Limit | Line | Fall before liquidation |
|---|---|---|
| 30% | 45% | 33% |
| 25% | 40% | 38% |
| 20% | 35% | 43% |
| 15% | 30% | 50% |
| 10% | 25% | 60% |
Borrow less than the limit and the room grows. Memecoins can fall that far in an hour, so leave room.
Avoiding it
- Borrow less than the limit.
- Repay part of the loan when the coin falls.
- Add your X handle so the desk can warn you in time.