LogoLogo
APPDISCORDDISCUSSIONDAO VOTING
  • Portal
  • Welcome to Radiant Capital
  • Introducing Radiant v2
  • ✨Project Info
    • RDNT Token
    • Deposit
      • How to Deposit
      • 1-Click Loop & Lock
      • rTokens
      • Withdraw assets
    • Borrow
      • How to Borrow
      • Health Factor
      • Loan Repayment
      • Liquidations
      • Flash Loans
      • Interest Rate Model
    • RIZ
      • How to Use RIZ
    • Riz Vault
      • How to use the RIZ Vault
    • Dashboard
      • Rewards Box
      • Lending Box
      • Deposits and Borrows
    • Dynamic Liquidity (dLP)
      • dLP Utility
      • dLP Liquidity Options
      • dLP Architecture
      • Zapping dLP
      • Maintaining Eligibility Status
      • Disqualification Bounties
      • Explainer Video
    • Manage Radiant
      • dLP stats
      • Vesting RDNT
      • Locked dLP
      • Platform Fees
      • Relock dLP
      • Auto-compound
    • RDNT OFT Bridge
    • Radiant-Stargate Bridge
  • 💫Navigation
    • Connecting to Arbitrum / BNB
    • Radiant V1 Migration
    • v1 Tutorials
  • ⚖️Governance
    • Overview
    • Key Terms
    • Proposal Criteria
    • Proposal Process
    • Specifications
  • 🔓Contracts & Security
    • Arbitrum Contracts
    • Base Contracts
    • BNB Chain Contracts
    • Ethereum Contracts
    • Scheme of Contracts
    • DAO Reserve
    • Security Timelock
    • Audits
      • v3 Audits
      • v2 Audits
      • v1 Audits
    • Immunefi
  • 💭Other Info
    • Mission & Values
    • Frequently Asked Questions
    • Integrations
    • Branding
    • Co-Marketing Guidelines
    • Terms of Service
Powered by GitBook
On this page
  • Introduction
  • Liquidators
  • Liquidation Penalty & Risk Parameters
  1. Project Info
  2. Borrow

Liquidations

PreviousLoan RepaymentNextFlash Loans

Last updated 1 year ago

Introduction

A liquidation is a process that occurs when a borrower's is reduced to 1 or lower due to their collateral value not properly covering their loan/debt value. This might happen when the collateralized asset decreases or the borrowed debt increases.

To reduce the risk of liquidation, you can repay any outstanding loans or deposit additional collateral to increase your Health Factor.

Liquidators

Liquidators are advanced DeFi users that have developed automated systems (ie. bots) to monitor collateralized positions and seek out loans that are eligible for liquidation. These bots then interact with the protocol's L2Pool contract and initiate a liquidationCall().

This enables Liquidators to pay back part of the debt owed and receive discounted collateral in return (also known as the liquidation bonus).

This liquidation mechanism incentivizes third parties to participate in the health of the overall protocol by acting in their own interest (to receive the discounted collateral) and as a result, ensure that borrows are sufficiently collateralized across the protocol.

Liquidation Scenario

  • Roger deposits 10 ETH and borrows 5 ETH worth of DAI

  • If Roger’s Health Factor drops below 1, his loan will be eligible for liquidation

  • A liquidator can repay up to 50% of a single borrowed amount (in this case, 2.5 ETH worth of DAI)

  • In return, the liquidator can claim a single collateral, which is ETH, at a 7.5% bonus

  • The liquidator claims 2.5 + 0.1875 ETH for repaying Roger's bad debt (2.5 ETH worth of DAI)

  • 0.1875 ETH is claimed by the protocol at a 7.5% bonus (15% total penalty)

  • After liquidation, Roger has 7.125 ETH (10-2.5-0.1875-0.1875 ETH) of supplied ETH collateral and 2.5 ETH worth of DAI borrowed.

Liquidation Penalty & Risk Parameters

The total liquidation penalty is 15%. Half of the penalty (7.5%) is allocated as a bonus to liquidators, while the other half is earmarked towards the Radiant Growth Fund, enabling the DAO to fund initiatives without having to sell RDNT tokens on the open market.

Each asset within Radiant Capital has specific values related to its risk, which influences how they are supplied and borrowed.

Asset (Arbitrum)
LTV
Liquidation Threshold
Liquidation Penalty

WBTC

70%

75%

15%

USDT

80%

85%

15%

USDC.e

80%

85%

15%

USDC

80%

85%

15%

DAI

75%

85%

15%

ETH

80%

82.5%

15%

wstETH

70%

80%

15%

ARB

40%

50%

15%

Asset (BNB Chain)
LTV
Liquidation Threshold
Liquidation Penalty

BTCB

70%

75%

15%

USDT

80%

85%

15%

USDC

80%

85%

15%

ETH

80%

82.5%

15%

BNB

80%

82.5%

15%

WBETH

67%

74%

15%

Asset (Ethereum)
LTV
Liquidation Threshold
Liquidation Penalty

WBTC

73%

78%

15%

USDT

75%

78%

15%

USDC

80%

83%

15%

sDAI

77%

80%

15%

ETH

80%

83%

15%

wstETH

80%

83%

15%

rETH

75%

80%

15%

✨
Health Factor