Health Factor & Liquidation
Liquidation event takes place when the position of a LP move against them to the point where the Heath Factor drops below the Liquidation Threshold. The Liquidation Threshold will be different for different pairs and asset. To make sure all the lender's fund are SAFU, we will initially set a quite safe liquidation threshold and we will keep increasing our liquidation mechanism and tools, looking forward to lower down the liquidation threshold in the future.
Heath factor
Maximum Leverage allowed
Risk Adjustment Ratio
When calculating the Health Factor, there is a risk adjustment ratio that will be applied to the volatile asset, and the collateral value after the risk adjustment is
For Stable asset and Altcoin with high FDV
USDT
1
USDC
1
WBTC
0.95
SOL
0.95
JLP
0.95
Trump
0.8
Liquidation Threshold
Liquidation happen when Health Factor drops below 1.
Example
Assume Sol price: $170; JLP price: $4
Example 1:
If Bob deposits 1 SOL and 1 JLP, and borrow 1 SOL to form LP position
Example2:
If Bob stakes 1SOL, borrow out 4 SOL (5x leverage)
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