Liquidation

When the loan balance exceeds the amount allowed by the collateral factor, the borrowing account becomes insolvent. When an account is underwater, other users can repay a portion of the outstanding loan in exchange for a portion of the collateral. Currently, the liquidation incentive is 20% (which can be changed through the Mortonn governance system). The liquidation incentive means that the liquidator obtains the borrower's collateral at a 20% discount compared to the market price. To avoid liquidation of an account, users will lose some collateral.