On-chain liquidations, explained in a few sentences:
By default, Aave V3 allows a single liquidation to repay at most half of a position’s debt. If the health factor falls below 0.95, or the position’s collateral or debt amount is very small, the entire debt can be liquidated at once.
Liquidators are rewarded to incentivize off-chain liquidators to act quickly on risky positions and prevent the protocol from accumulating bad debt.
The more volatile the collateral, the higher the health factor should be kept, so there’s enough time to act during a sharp drop.
$COMP 20.02 (-1.48%)
By default, Aave V3 allows a single liquidation to repay at most half of a position’s debt. If the health factor falls below 0.95, or the position’s collateral or debt amount is very small, the entire debt can be liquidated at once.
Liquidators are rewarded to incentivize off-chain liquidators to act quickly on risky positions and prevent the protocol from accumulating bad debt.
The more volatile the collateral, the higher the health factor should be kept, so there’s enough time to act during a sharp drop.
$COMP 20.02 (-1.48%)
