At what point and how does your loan get liquidated? For example, if I were to be able to borrow 100$ from ANC and set the TVL% at the assumed safe rate (35%). How would my collateral be liquidated if it crosses past the 35%? Would Anchor liquidate my entire collateral or would they take a portion of my collateral and sell it to put my loan back in the agreed percentage positioning?
Thank you,
Aidan
NRL member
Your loan does not get liquidated until your LTV crosses 50%. The reason 35% is “safe” is that it gives you some wiggle room in case the price of your collateral drops (in which case your LTV will go up). If your collateral is <500UST, all of it will be liquidated when your loan goes past 50% LTV. If your collateral is >500UST, it will only be partially liquidated so that your loan goes back to 0.8 of your maximum borrowable amount (which is 40% LTV).
That’s what I got from reading the docs, please correct me if I am wrong.
absolutely correct - it’s also worth noting that the borrow limit as shown in the UI is reflecting how far you are form the 50% LTV limit (i.e. you’re at 70% borrow limit would mean you’re at 35% LTV)