# Liquidations

Teller replaces price-based liquidation pools by utilizing fixed collateral and fixed duration loans in concentrated liquidity order books.

Time-based liquidation enables more flexible collateral options for borrowers and LPs can regularly earn above money market rates with decreased risk.<br>

### **What is time-based liquidation?**

Loans are only vulnerable to liquidation if a borrower fails to make a scheduled repayment.

Unlike price-based liquidation pools that rely on health factors or other collateral factors, any change in the underlying value of the collateral does not trigger liquidation on Teller.

If a borrower doesn’t make a scheduled repayment after a pre-determined due date (plus a grace period), the loan will default.<br>

### **What happens if a loan defaults?**

After default, a liquidator can repay the loan on the borrower’s behalf and seize **100%** of the collateral associated with the loan.

The lender can also close the loan without repayment and seize **all of the collateral.**

(On a per-wallet basis.)<br>

### **Is there a liquidation penalty?**

After liquidation, **all** the collateral associated with a loan is seized and transferred to the liquidator. Other than that, there are no additional liquidation fees.<br>

### **How do I avoid liquidation?**

If scheduled loan repayments are made on time, there is no price-based risk of liquidation.