What is Liquidation & Liquidation Bounty?

Liquidation occurs when leveraged positions on EZ-FI (>1x) have a Debt Ratio >= 90%. When this happens, liquidators can liquidate these positions by repaying the debt (partially or fully) and earn liquidation incentives. The liquidation varies for each liquidity pool.

For higher-volatile assets eg. APT, ETH, BTC, liquidation bounty can be as close to ~5% of the debt amount the liquidator repaid; while for lower-volatile assets eg. DAI, USDT, USDC, liquidation bounty is lower but can be as close to ~3% of the debt amount the liquidator repaid.

Note: The liquidation bounty will be paid in the form of LP tokens.

For instance, if liquidators liquidate a position with the collateral value equivalent to 100 APT by repaying 90 APT (90% LTV). Liquidators will get LP token back in a value equivalent to ~95 APT (EX. liquidation bounty for APT = 5%) and User will get LP token back in a value equivalent to ~5 APT