Liquidation

To remain decentralized, AxiomLend cannot rely on a central entity to perform the liquidation but needs to incentivize other players to liquidate the collateral, repay the borrowed funds, and in return receive the collateral in another asset with some discount.

Why and when do liquidations happen? Liquidations are the results of unsuccessful bets and are highly correlated with steep changes in prices of underlying tokens. The changes cause borrowers that bet on the "wrong side" of the change to exceed their borrowing quota allowed by their collateral, leading to under-collateralization (in other words, the collateral becomes worth less than the borrowed amount) and become subject to liquidation. When the change is prices are steep, unprepared borrowers either lack the liquidity or the operational readiness to repay their borrowings or to increase the collateral and bring it back to healthy levels (collateral assets > borrowed assets)

Collateral health of borrowers can be monitored in real time at: