tell me please, what happend, when come liquidatio... @officialjustlend

Asked 1085 days ago
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tell me please, what happend, when come liquidation process? user A put 1000usdt to Support user B put X btc to Support and turn on it as Collateral in dashboard user B borrow 1000usdt using btc as collateral and lost it (drink beer for example) 1. no any liquidation process, btc price infinitely rised up 2. a liquidation process happened, btc price dropped down (so collaterated btc price below 1000usdt price) how user A give back usdt? hi got btc?

asked 1085 days ago

1 Answers

In a liquidation process, user A will not receive any of their original investment back as it is already lost due to user B's actions. User B, on the other hand, will have their collateral liquidated and the value of their collateral will be used to pay back the amount that was borrowed. In this case, if the maximum collateral factor of 75% is used, then user B will be left with $562.5 Usdt. User A, however, will not receive any of their original investment back and will have a 0 balance. Liquidation processes are meant to protect lenders from borrowers who default on their loans, but unfortunately, it often results in lenders losing their investments.
answered 1085 days ago
0
Both user A and B will be liquidated so what will happen now is User A will have 0 balance but user B will have $562.5 Usdt if the Max Collateral factor of 75% is used for each borrow
answered 1085 days ago

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