If the value of the collateral is less than the amount borrowed by the borrower, the borrower's borrowing position is liquidated. The borrow limit determines the risk level, and liquidation occurs when this proportion exceeds the liquidation threshold(Max LTV).
Liquidations are automatic. When this occurs, LineaBank closes the borrower's position, returns the value of the collateral to the lending pool, and returns the remaining assets to the borrower.
What is the Max LTV?
The percentage of collateral value that can be borrowed. If the Max LTV for USDC is 80%, the amount a user can borrow for 100 USDC is 80 USDC.
Protocol revenue sharing system
When a borrower is liquidated, there is a liquidation penalty equal to 15% of the borrower's collateralized assets. LineaBank distributes 80% of that amount to the $LAB stakers on a weekly basis. The more $LAB tokens you stake, the more your reward increases proportionally.