Liquidation is the DeFi mechanism that protects lenders when collateral values drop. Most protocols liquidate your entire position — Quamrailsinvestir doesn't.
When your loan reaches 85% LTV (loan-to-value), only 50% of your collateral is sold to cover the debt portion plus a 5% penalty. The remaining 50% stays locked in your position.
This partial approach exists for one reason: flash crashes. Crypto prices can drop 30% in minutes and recover within hours. Full liquidation during a flash crash means permanent loss of collateral that would have recovered in value. Partial liquidation reduces this risk by preserving half your position.
The mechanism works in three steps. First, the system detects that your loan has crossed the 85% LTV threshold using Chainlink oracle price feeds. Second, exactly 50% of your collateral is sold at market price via on-chain DEX routing. Third, the proceeds cover the proportional debt plus the 5% penalty, and the remaining collateral stays locked.
You keep the borrowed stablecoins regardless. And you still own half your collateral position.
The 5% penalty exists to discourage users from deliberately managing positions at the liquidation boundary. It's applied only to the liquidated half — not the entire collateral amount.
We also provide early warning at 80% LTV — via in-app notification, email, and optional SMS — giving you time to add collateral and avoid liquidation entirely.
This is one of the core safety mechanisms described in our security architecture. For the full technical specification, see the whitepaper.