# Liquidation

**Liquidation**is the process that could happen when your mint position value is below the

**Maintenance Margin.**When this happens, the platform will make your mint position available to everyone at a discount to allow them to liquidate your position. The Liquidator can liquidate your position to keep your mint position below the

**Maintenance Margin.**Your collateral will be partially liquidated just enough to keep your mint positions equal to the

*healthy margin level.*

The current Maintenance Margin is at

**115%,**while the healthy margin level is 5% above the Maintenance Margin, which is at**120%.**The maximum liquidatable amount is calculated by using the following formula (in dAsset):

Let

$m_m$

be the maintenance margin.Let

$r$

be the collateral-to-dAssets ratio, which is the amount of dAssets minted over the value of the current Oracle price of the minted dAssets.Let

$n_{col}$

be the amount of collateral used for that mint position.Let

$n_{dAssets}$

be the amount of dAssets received for that mint position.$maxLiquidatable = \frac{(m_m + 0.05)\times n_{dAssets} - (r \times n_{col})}{m_m - 1}$

A Liquidator will receive a 5% discount from the value of to-be-liquidated assets or using the following formula (in DOLLY):

$maxSeizable=\frac{1.05 \times maxLiquidatable}{n_{col}}$

- Alice opened a mint position of 1 dXXX (oracle price of $100) with $150 worth of DOLLY (This example excludes the minting fee to make it easier to understand)
- The price of dXXX then rose to $131, which means that the margin level is 115%, reaching the
**Maintenance Margin** - Bob the liquidator sees that Alice's mint position is allowed for liquidation. Using the above formula, Bob can see the amount of Alice's collateral that could be liquidated in dXXX is:

$maxLiquidatable = \frac{(1.15 + 0.05 )\times 1 - (\frac{1}{131}\times150)}{1.15 - 1} = 0.3664$

- Bob then liquidates as much as he possibly can. To do so, Bob has to buy a 0.36 dXXX token to liquidate the position. The value that Bob needs to buy is$0.3664 \times 131 = \$47.9984$(assuming that the Twindex price is identical to Oracle price)
- Bob is receiving a 5% discount, so after Bob liquidates the position, Bob will receive$\$47.9984\times1.05=\$50.3983$
- Alice will be left with$150-50.3983=\$99.6017$worth of DOLLY with the mint position of$1-0.3664=0.6336$dXXX. At this point, this mint position will have a margin level of 120%, which is a
*healthy margin level* - If Alice closes this position, Alice will only need 0.6336 dXXX to close and receive $99.6017 worth of DOLLY back

Last modified 1yr ago