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.
USDC/USDT
5x
84%
SOL/USDC
5x
83%
JUP/SOL
5x
83%
SOL/PENGU
5x
83%
We are actively working to raise this threshold closer to 90% as we enhance infrastructure and improve overall system resilience. Over time, this will allow for higher leverage and tighter margins.
DefiTuna currently maintains a conservative liquidation buffer to minimize risk while infrastructure improvements are ongoing.
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.
Consider the following scenario :
Notional value: $120
Your position is forcefully closed via Orca.
Liquidation Fee: 5% of remaining funds after debt repayment. In this case: 5% of $120 = $6, paid to the liquidator (the caller of the liquidation instruction).
The debt is repaid to the Lending Pool.
Any remaining funds after fee and debt repayment are returned to the user.
Liquidations are not guaranteed to happen instantly. Execution speed depends on Solana network congestion.
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.
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