How do liquidations work?
If a borrower misses their repayment, they have a five day grace period to make the payment before their collateral can be liquidated by the Pool Delegate and repaid to the Lending Pools that funded the loan.
Liquidation Timeline
In case of a collateral shortfall after the liquidation, the amount can be claimed from the Balancer Pool, which contains 50:50 MPL and USDC. Balancer Pool Tokens will be redeemed on Balancer for stablecoins and distributed to the Lending Pool to cover liquidity lost.
All Borrowers enter a Master Loan Agreement during onboarding which enables legal enforcement.
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