A Wrap-up of the Design Features of Rabbit Finance’s Liquidation Mechanism

BSC Spotlight
2 min readJul 5, 2021


Rabbit Finance, the top-ranked excess lending protocol on Binance Smart Chain, is widely popular amongst users. Today, let us fathom the basic principles of its liquidation rules.


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%

Liquidation Rules

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 flash loans.

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 loan.

The value you receive back after liquidation will depend on the Kill Factor. Please refer to the table below for an estimate.

Calculation formula:

Value return to Farmer = (Position value — Debt value (include interest) — Liquidation fee)

Join Rabbit Finance today:

Website: https://www.rabbitfinance.io/

Telegram English: https://t.me/RabbitFinanceEN

Twitter: https://twitter.com/FinanceRabbit