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.

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.

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.)

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.

How do I avoid liquidation?

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