A Summary of the Design Characteristics of Rabbit Finance’s Liquidation Mechanism
Undoubtedly, Rabbit Finance, the top-ranked excess lending protocol on BSC, is not unfamiliar to many users. Today, let us learn about the Liquidation Mechanism.
Kill Factor: Maximum debt ratio, beyond which anyone can liquidate the position.
Debt Ratio: Debt value is a percentage of the total position value.
Formula: Debt Ratio = loan value / position value (in loan token) *100%
Risk Ratio: Ratio of debt ratio to kill factor.
Formula: Risk Ratio = debt ratio / liquidation coefficient * 100%
In the event that your debt ratio has gone above the Kill Factor, that is to say, when the risk ratio of the position reaches 100%, your position will be liquidated.
1. The liquidation mechanism adopts DEX+CEX double price verification, liquidation will be executed only when the error is within 5%.
2. Two price verifications (with an interval of 1 minute), to prevent attackers from profiting by price manipulation in the same block through a flash loan.
3. The Rabbit Finance participates in position liquidation, and liquidation is not executed by bounty hunters, to prevent attackers from obtaining liquidation benefits through flash loans.
The value you receive back after liquidation will depend on the Kill Factor. Please refer to the table below for an estimate.
Value return to Farmer = (Position value — Debt value (include interest) — Liquidation fee)
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Telegram English: https://t.me/RabbitFinanceEN