Why do on-chain loans get liquidated?
Liquidators repay part of a borrower's debt in exchange for collateral worth slightly more than the debt repaid. The extra amount is called the liquidation bonus.
When collateral prices plunge and liquidation isn't completed in time, the remaining collateral may not be enough to repay the debt, leaving the protocol with bad debt.
The most important thing to remember when managing your positions: set up health factor alerts using a third-party monitoring tool. Don't wait until you've been liquidated to find out.
$COMP 20.29（-1.36%）
Liquidators repay part of a borrower's debt in exchange for collateral worth slightly more than the debt repaid. The extra amount is called the liquidation bonus.
When collateral prices plunge and liquidation isn't completed in time, the remaining collateral may not be enough to repay the debt, leaving the protocol with bad debt.
The most important thing to remember when managing your positions: set up health factor alerts using a third-party monitoring tool. Don't wait until you've been liquidated to find out.
$COMP 20.29（-1.36%）