> For the complete documentation index, see [llms.txt](https://hypotheca.gitbook.io/hypotheca-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://hypotheca.gitbook.io/hypotheca-docs/hypotheca/economics/liquidation.md).

# Liquidation

How Hypotheca liquidates risky borrowing positions and protects pool solvency through defined thresholds and safeguards.

Liquidation is the recovery path for borrowing positions that breach required risk conditions.

It protects pool solvency and limits losses to liquidity providers. The mechanism operates within defined collateral, oracle, and concentration safeguards.

### When liquidation applies

* Minimum collateralization: **125%**
* Liquidation threshold: **110%**
* Liquidation bonus: **8%**
* Maximum borrow per agent: **5% of the pool**

```
Position Falls Below Required Threshold
        →
Liquidation Becomes Eligible
        →
Collateral Is Seized
        →
8% Liquidation Bonus Applies
        →
Liquidation Event Is Recorded
```

Oracle safeguards support this process. A 5% oracle-source deviation pauses borrowing. A 15% price movement within one hour triggers a global borrow halt. A feed older than 60 minutes also triggers a pause.

Emergency liquidation applies when pool bad debt exceeds **5%**.

### Recorded event

Each liquidation event records:

* `agentId`
* Amount seized
* `txHash`
* Timestamp
* Trigger reason

The transaction hash ties the event to an on-chain record. This page describes the defined thresholds and safeguards, not auction, keeper, partial-liquidation, or execution mechanics.


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