DeFiIntermediate

Liquidation

The forced closing or repayment of a position that no longer satisfies required collateral or margin rules.

PLAIN-ENGLISH DEFINITION

In more detail

In lending protocols, liquidators can repay debt in exchange for collateral under protocol terms. Exact triggers and amounts vary.

PUT IT IN CONTEXT

A practical example

A liquidator repays part of an unsafe loan and receives collateral.

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Educational explanation based on the linked documentation. Protocol details can evolve. Sources & standards