The design and principle of the Liquidation process on Larix
Product logic of Larix
Flowchart of User deposits, collateral and borrow limit:
If the collateral button of an asset is not switched on, then it won’t be liquidated.
Collateral factor: The maximum amount users can borrow is limited by the collateral factors of the assets they have supplied.
Liquidation line: The max debt ratio that an account can achieve before liquidation. It is designed to protect user assets from small price fluctuations.
L-Token: Deposit proof
Liquidation Reward: The reward for liquidation Initiator in the main pool,Bonfida pool,LARIX pool are 8% of the total liquidated value. The reward for liquidation Initiator in the xSOL pool is 2% of the total liquidated value.
Several possible reasons leading to liquidation:
The floating value of collateral changes:
Withdrawing part of collateral increases debt ratio
The price of collateralized token decreases
The floating value of borrowings changes:
The interest of loans continuously increases.
The price of borrowed assets increases
1. Liquidate instruction
1.1 - Repay the borrowed assets for the liquidated account:
Only one type of asset can be liquidated each time.
The ‘asset to repay’ and ‘asset to seize’ can be selected by the liquidator.
The liquidation limit amount is half that of total borrowed value of the selected token.