Liquidations

Liquidations

When can my position get liquidated?

Liquidation protects lenders by preventing bad debt. A position becomes eligible for liquidation when its Loan-to-Value (LTV) exceeds the market's Liquidation Loan-to-Value (LLTV) threshold, indicating the account is no longer sufficiently collateralized. Learn more about liquidations here.

What is the liquidation price?

The liquidation price is the collateral price at which a position becomes eligible for liquidation. It is displayed in the Tenor interface and should be monitored closely to avoid the position becoming undercollateralized.

Who performs liquidations?

Liquidations on Morpho are permissionless. Anyone can repay an undercollateralized account's debt and, in return, seize an equivalent value of the borrower's collateral plus a bonus. This bonus serves as the liquidator's incentive and profit.

How can I avoid liquidations?

To avoid liquidation, a user's position must maintain a Loan-to-Value (LTV) ratio that remains below the market's Liquidation Loan-To-Value (LLTV) threshold. If the LTV increases, users can reduce it by depositing additional collateral or repaying part of the outstanding debt. Tenor includes optional alerts that can help users stay informed when their position nears the liquidation threshold.