Liquidations
Liquidations will occur when a position's LTV Ratio equals or exceeds the Liquidation Threshold.
For Example:
A user borrows 25pETH against a Cryptopunk. The floor is 50 ETH, the max LTV is 60% and Liquidation Threshold is at 70%. His current LTV is of 50% and far from liquidation.
If the floor dropped to 35 ETH and they didn't repay any of their debt, their position's LTV would reach 71%, which is higher than the Liquidation Threshold, and be liquidated.
NFT Liquidation
When users are liquidated, the DAO repays the users' pETH/PUSd debts by burning pETH/PUSd in the DAO. User can elect to insure their position to avoid immediate liquidation.
For uninsured positions with an active LTV Boost and/or Traits Boost, the locked $JPGD Tokens for the boost(s) will be burned instantly if liquidated.
For insured positions with an active LTV Boost and/or Traits Boost, the locked $JPGD Tokens for the boost(s) will be burned if the position is not repaid within the grace period of 48h. Learn more about Liquidation insurance.
When liquidated, NFTs will go up for auction, and more details are available in the Auctions section of the documentation.
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