Liquidations

A liquidation event occurs when a user's Loan-to-Value ratio (LTV) surpasses the allowed maintenance margin threshold. This happens when the market moves against the position to the point where the collateral no longer sufficiently covers the borrowed funds.

The maintenance margin threshold is between 84% of the initial margin at max leverage 5x (Stable Coin Farming), and 83% threshold at 5x leverage depending on the risk factor.

Token Pair
Leverage
Margin Threshold

USDC/USDT

5x

84%

SOL/USDC

5x

83%

JUP/SOL

5x

83%

SOL/PENGU

5x

83%

LiquidationThreshold = (MaxLeverage - 1 ) x 1.05 / MaxLeverage where MaxLeverage is the maximum allowed leverage for a given market

If your Loan to Value Ratio (LTV) is greater or equal to the liquidation threshold, your position becomes eligible for liquidation. Once eligible, liquidators can call the liquidation function, and your position is forcefully closed.

Partial Liquidation

To protect users and improve execution on pools with lower liquidity or large position sizes, DefiTuna supports partial liquidation:

  • If a full liquidation fails, the system will attempt to close 50% of the position, then 25%, and so on.

  • This staged approach improves the chance of successful liquidation and reduces overall slippage.

Last updated