What happens to users whose positions are liquidated?
When Debt Ratio = 100%, the position would be at liquidation risk. At liquidation risk, any liquidator can liquidate your position.
When liquidators liquidate your position, they will be repaying the debt in exchange for the liquidation bounty.
For instance, if you have 20 ETH in debt and liquidators choose to liquidate 10 ETH (they don't need to repay the full debt amount if they don't want to) by repaying 10 ETH, liquidators will get LP token back in a value equivalent to 10.5 ETH (5% bonus to liquidators).
If this liquidation brings your Debt Ratio below 100%, other liquidators will not be able to continue liquidating your position.
As a result, you will still have your leveraged position at a smaller position value. Your position value is smaller because:
1) A part of your position value (in LP token) is given to liquidator as a bounty
2) A portion of the debt is being repaid by the liquidator. Amount of debt also contributes to your position value.
Last modified 7mo ago
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