🪐 Cephei — Why you can be liquidated?

🪐 Hi, Cephei community! Some of you may saw already out new feature with liquidation, today we'd like to explain how's the whole process works and why protocol should do it:

⚠️ Is your position secure?
As you might have guessed, state of your current credit position can described with one parameter — Health Factor. It shows the ratio of your whole collateral that have deposited to your account to borrowed funds.

If your HF is below 1.3 or even close to 1 — it's a danger sign. Your position will likely be liquidated.

💭 "What's the liquidations and why we need it?"
If you have such question — we're trying to answer it as simple as possible:

Liquidation in the lending protocol means the complete withdrawal of all collateral funds directly by the contract on which those very funds was stored. The reason could be a large number of loans or low collateral, causing HF conditions to become critical.

ℹ️ It is important to mention that even after liquidation, the borrowed funds still remain with the user and he can freely dispose of them.

Protocol produces liquidations of such risk positions in order to restore the funds storage and maintain the reliability of the ecosystem.

👇 A little task for our Users:
Go to your credit account and check "HF" parameter, if it's:

🟢 above 1.3 — all is good and secure!

🟠 between 1.1 and 1.3 — you need to reduce risk of liquidation. You can do this by simply adding more funds in collateral or close some of your credits.

🔴near 1 and your position wasn't liquidated — this is a critical bug. Please take the screenshot of your app and send it in comments, we'll take care of the problem and thank you.

🪐 Our resources:
Cephei-App | Landing | CIS Channel | Eng Community | X | NFT