Liquidations

A liquidation occurs when your Loan-to-Value ratio (LTV) exceeds the allowed maintenance margin threshold. This happens when the market moves against your position to the point where your collateral no longer sufficiently covers your borrowed amount.

If your LTV is greater than or equal to the liquidation threshold, your position becomes eligible for liquidation. At that point, DefiTuna (acting as the liquidator) can trigger the liquidation process by calling the liquidation function. When this happens, your position is forcefully closed.

Consider the following scenario :

  • Notional value: $120

  • Your position is liquidated via Orca or Fusion AMM.

  • Liquidation Fee: 10% of the remaining funds after debt repayment. In this case: 10% of $120 = $12 goes to DefiTuna, as the liquidator.

  • The debt is repaid to the Lending Pool.

  • Any remaining funds after fees and debt repayment are returned to you.

Liquidations may not be instantaneous. Execution speed depends on Solana network congestion and system activity.

Partial Liquidation

To improve execution and reduce slippage — especially on low-liquidity pools or for large position sizes — DefiTuna supports partial liquidations:

If a full liquidation fails, the system will attempt to close the position in smaller portions:

  • First 50%

  • Then 25%

  • And so on...

This staged approach increases the chances of a successful liquidation while minimizing market impact.

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