Liquidation
Last updated
Last updated
MONEY is ultrasound because it is backed by over-collateralised yield bearing tokens. Moremoney's first product supports isolated stable coin borrowing. Unlike other protocols, with Moremoney each Collateralized Debt Position (CDP) is isolated and only at risk of its own liquidation. This means that if you are borrowing against ETH and USDC, the liquidation risk is calculated individually for these collateral.
On Moremoney we have removed barriers to entry, which often make liquidation exclusively accessible to tech savvy individuals and bots. Anyone can trigger liquidations for loans that rise above their designated LTV.
If there are any liquidatable positions, a special notification will pop up in the UI, prompting users to visit the liquidatable positions page. There, triggering liquidations is as simple as clicking the liquidate button on a position that meets the liquidation threshold. Collateral in the position is automatically sold on-chain to extinguish debt using MONEY flash loans under the hood.
Importantly: users do not have to hold MONEY or other capital in their wallets to successfully execute liquidations. Users who trigger liquidations receive a liquidation fee ranging from 4-12%. Note: this reward is before slippage and gas costs. Users should take note of estimated gas prices. As a rule of thumb liquidation is only clearly profitable if the loan is in excess of 10x of the value of estimated gas price for liquidating.
Most liquidations are partial, i.e. not the entire loan is extinguished using the position's collateral. Instead, the liquidator will most commonly only extinguish a part of the user's loan, enough to restore the position to a healthy collateralization ratio. Partial liquidations can save the liquidator on slippage and the position holder on liquidation fees.
