Liquidations

How undercollateralized positions are closed, and what liquidators earn.

When a position is liquidatable#

Any position below 130% can be liquidated by anyone. iAAPL is debt, so a rising AAPL price is what pushes positions toward liquidation.

What the liquidator receives#

The liquidator burns iAAPL from their own balance (capped at the borrower's debt) and receives 105% of the burned value in USDG:

seized = burned × price × 1.05     (capped at the position's collateral)

Partial liquidations are allowed. The Liquidation Monitor lists liquidatable positions and pre-fills the vault form for you.

Underwater positions#

If a position's collateral can no longer pay 105% of its debt, the liquidator still earns the full bonus: they burn only the debt the collateral covers and receive all of the collateral. The remaining debt is written off, the position is closed, and the amount is recorded on-chain in badDebt with a BadDebtWrittenOff event. Liquidating is therefore always profitable, so underwater positions never linger.