Price information and liquidations
If my borrow rate exceeds 100% due to price movement, do I get fully liquidated and lose 100% of my collateral?
Liquidations occur when a user’s LTV exceeds the Liquidation Threshold. However, UX’s liquidation is incremental. What does it mean?
Incremental liquidation means only a small portion of your loan will be liquidated (Liquidation Penalty: 5%-10% depending on the asset) in order to bring the user to a healthy LTV ratio without penalizing the user for more than what is necessary.
Incremental liquidation is a design first proposed by UX as a borrower protection mechanism.
How does UX get its price information on assets?
UX takes real-time prices from Ojo. The Ojo Network is a Cosmos SDK blockchain, that specializes in aggregating data from both centralized and decentralized sources in a permissionless manner and relaying that information to other blockchains.
Ojo is an important price security feature for UX and you can read more about Ojo and the Historacle here. Read more about Ojo
Is it possible for someone to get liquidated due to an error in the price on UX?
UX uses Ojo for price information, which aggregates price data from various sources, including both on-chain and off-chain sources such as Binance, Coinbase, OKX, Osmosis, and many more. It is important to acknowledge that price errors can occur on any exchange or platform, and users should be aware of the potential risks involved.
However, because Ojo takes price information from multiple sources, it is unlikely for UX to take the wrong price just because one or even a few of the exchanges produce an error.
If there is a sudden drop in asset prices, liquidations could be affected, especially in a volatile market. UX uses the Historical to avoid price manipulation.
For more details on liquidations or to enhance your understanding, visit here
