Liquidation in DeFi

When you create a synthetic asset in Syde Protocol, you deposit $TON as collateral. This collateral ensures that your synth is secured and the system remains stable.

What is liquidation?

Liquidation is the automatic closing of your position by the protocol if the collateral becomes too small compared to the minted synth.
Simply put: if the TON price drops and your C-Ratio falls below 260%, the system sells all your collateral. This acts as a penalty for insufficient collateralization.

When does it happen?

• The TON price drops sharply.
• The value of the minted asset increases significantly.

How to avoid liquidation?

• Keep track of the TON price and your positions.
• Add more collateral or repay part of your debt if your C-Ratio is getting low.

Liquidation keeps the system stable, but to avoid losing your collateral – you need to manage your risks.

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