Introduction to BENQI
Risks & Audits
Liquidation happens when a borrower’s
drops below 1
due to the value of their collateral not properly covering their loan/borrowed value.
This happens when the collateral decreases in value or when the borrowed debt increases in value against the collateral.
The collateral vs loan value ratio is shown as
. In a liquidation, a borrower’s debt is repaid and that value plus a liquidation fee is taken from the available collateral.