Introduction to Adequacy Ratio

At dForce Lending, we consider Adequacy Ratio as the liquidation point.

Allowing your debt position to fall below the minimum Adequacy Ratio will result in part of your collateral being liquidated with a discount, which will help lenders against financial loss.

〖Amount〗_col : supplied asset amount as collateral
〖Price〗_col : collateral asset price in USD
〖LTV〗_col : collateral asset loan to value, in range [0,1}
〖Amount〗_loan : borrowed asset amount
〖Price〗_loan : borrowed asset price in USD
〖BorrowFactor〗_loan : borrowed asset borrow factor, in range {0,1]

How do you deal with loan default?

Borrowers need to lock up supported assets in a smart contract as collateral to support your crypto loan. If the loan failed to satisfy the Adequacy Ratio and there was no top-of of collateral or timely repayment, part of your collateralized asset will be auctioned to repay your loan.

Please note a liquidation penalty will be charged to ensure timely payback. So, we strongly recommend you to exercise caution and carefully monitor your debit position to avoid liquidation, by refinancing or terminating your loans in time.

How much is the liquidation penalty?

7% - applied to all assets supported on dForce Lending.

How to participate in liquidation?

Liquidation on dForce is open to everyone who repays defaulted loans for borrowers and receive a nice bonus for doing so, which helps to keep the system solvent and robust.

You can liquidate up to 50% of selected collateralized asset for a defaulted loan in a single liquidation transaction.

Click here for a step-to-step guide on how to participate in dForce liquidation.

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