💟 Health Rate & Liquidation

Health rate

The collateral factor limit represents the threshold beyond which a borrower's position becomes subject to liquidation. For instance, if the collateral factor for a specific asset like USDC is set at 80%, it means that a user can borrow up to 80% of the value of their collateral. So, if they have 100 USDC as collateral, they can borrow up to 80 USDC against it.

The borrower's Borrow limit is determined by the weighted average of the LTV ratios of all their collateralized assets.

In cases where in case where the borow limit is exceeded, a partial liquidation occurs. Here, SolidLizard Lending or any third-party liquidator receives a 8% liquidation incentive. They can liquidate up to 50% of the borrower's collateral. After deducting the liquidation incentive, the remaining amount is returned to the borrower, thereby stabilizing their health factor.

Liquidators

Liquidators have the ability to execute the LiquidateBorrow function, which is designed to liquidate accounts that have become insolvent. When invoking this function, liquidators provide arguments including the account's address, the borrowed asset amount to be repaid and converted into collateral, and the address of the slToken currently serving as collateral held by the borrower, which the liquidator intends to seize. The value specified in the RepayAmount field is a Uint expressed in the units of the underlying borrowed asset.