At What Price Can a Liquidator Take Over?
Drop collateral price, calculate the liquidation line, and watch a keeper repay debt for incentivized collateral.
- Calculate a liquidation price from debt and threshold
- Explain why health below 1.00 permits liquidation
- Trace keeper repayment, bonus, and collateral transfer
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Drop collateral price, calculate the liquidation line, and watch a keeper repay debt for incentivized collateral.
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Q01Why reward a liquidator who takes someone’s collateral?＋
The liquidator repays debt and converts risky collateral into realizable assets. The bonus pays for gas, volatility, and exit risk; without willing liquidators, bad debt remains with the protocol.
Liquidation is not a protocol suddenly confiscating everything. It is a prewritten boundary: once oracle-valued collateral no longer covers the safety threshold, a liquidator repays debt and receives collateral with a defined incentive.
Calculate a liquidation price first
If collateral quantity is fixed, an approximate line is:
liquidation price = debt ÷ (collateral quantity × liquidation threshold)
This is not a forecast. It is the price at which health factor would reach 1.00. Real execution also considers bonus, auction depth, fees, and latency.
TOKEN collateral → credits
Put one loan into the state machine and watch price, interest, oracle, and keeper actions reshape the account.
Lower the oracle price until a liquidator can take over the collateral.
- Wallet TOKEN
- 100
- Account cash
- 5,000
- Protocol liquidity
- 100,000
- Liquidator TOKEN
- 0
Collateral is locked once deposited; a withdrawal first simulates the resulting health factor.
Move the outside market, then choose when the oracle updates. Current gap 0.00%.
Line 1.00; bonus 5.00%. The button unlocks only after health crosses the boundary.
Deposit collateral, then borrow near the capacity. Capacity, health, and pool liquidity are three different boundaries.
- 01
抵押池创建：100 TOKEN, 初始价格 120 credits.
Use the slider to return to an earlier step. Continuing from there replaces the later history with a new sequence.
Where does the liquidator’s incentive come from?
A liquidator is not a charity. It uses its own credits to repay debt, receives collateral, and may receive a 5% bonus. The bonus compensates gas, price movement, and execution risk; too low may leave no keeper, while too high increases borrower loss.
Expand: how this step works
require healthFactor < 1.00
repay = min(debt, collateralValue / (1 + liquidationBonus))
seize = repay * (1 + liquidationBonus) / oraclePrice
liquidator.cash -= repay
protocol.liquidity += repay
borrower.debt -= repay
borrower.collateral -= seize
If all collateral is seized and debt remains, the remainder is bad debt that must be absorbed by reserves, insurance, or another participant.