Liquidations
How unsafe positions are closed, and when they cannot be.
What a liquidation is#
Every borrower posts more collateral than they borrow. If the stock falls far enough, that cushion thins and the loan risks being worth less than what is owed, which would leave lenders holding the loss.
So the protocol lets anyone step in: you repay part of a risky borrower's debt out of your own pocket, and in exchange you receive some of their collateral at a discount. The discount is your profit and it is the entire reason strangers bother. The borrower loses collateral but their loan is pulled back to safety, and lenders stay whole.
Nobody is appointed to do this. It is an open bounty, permissionless by design, because a protocol that depends on a privileged liquidator is only as solvent as that liquidator's uptime.
When a position becomes liquidatable#
When its health factor reaches 1.0, which is when debt equals collateral value at the market's liquidation threshold.
| Market | Max LTV | Liquidation threshold | Buffer |
|---|---|---|---|
| Tesla | 45% | 50% | 5pp |
| NVIDIA | 50% | 55% | 5pp |
| Apple | 55% | 60% | 5pp |
| Microsoft | 55% | 60% | 5pp |
| S&P 500 ETF | 60% | 65% | 5pp |
Parameters#
| Parameter | Value | What it does |
|---|---|---|
| Liquidation bonus | 5% | The discount the liquidator receives on seized collateral |
| Close factor | 50% | The most of a position's debt that can be repaid in one liquidation |
The close factor means a single liquidation cannot wipe out an entire position. A borrower whose health factor dips below 1.0 loses at most half their debt in one event, and can restore the position by repaying or adding collateral before anyone comes back for the rest.
When liquidations cannot happen#
This is the part specific to HaltGate. Liquidations are gated on the market being OPEN, so the moment a price feed pauses, every liquidation in that market stops.
The reason is simple: liquidating against a stale price is not risk management, it is taking someone's collateral using a number that stopped being true. If a stock is halted pending a merger announcement, the last printed price carries no information about what the collateral is actually worth.
RESUMING is a grace window
Fixed-term loans are never liquidated#
Nothing on this page applies to a fixed-term loan. Those positions cannot be closed out on price at any point in their term. They are resolved by maturity instead, through a separate settlement path that reads no price at all.
Liquidating on HaltGate#
Open the Liquidate tab on any market, paste an address, and the panel shows its health factor and whether it is currently liquidatable. You need USDG to repay with, and you receive the market's collateral token plus the bonus.
- The transaction is simulated before you sign, so a revert surfaces as a readable message rather than a failed send.
- Matured fixed-term loans appear in the same tab, since closing them out is the same third-party keeper role. Settling one requires no capital at all, only gas.
- A position sitting at exactly
1.0is liquidatable. There is no grace band below the threshold.