In Borrow Mode, your borrowing power depends on the value of the assets in your Safe:
Different assets may have different LTV values
The system ensures you maintain a healthy collateral ratio
If collateral values drop significantly, you may need to add more funds or repay some debt
Understanding Liquidation Risk
What is liquidation?
If your borrowing exceeds your maximum allowed amount (due to collateral value decreases or other factors), the system may liquidate some of your assets to maintain the health of your account.
How to avoid liquidation:
Monitor your borrowing power and total borrowings
Keep a healthy margin between what you've borrowed and your maximum borrowing limit
Add additional collateral or repay some debt if your position approaches risky levels
Ensure you maintain sufficient collateral value for any borrowed funds
What happens during liquidation:
The Debt Manager controls the liquidation process
Specific tokens from your Safe are transferred to the liquidator
50% of your total collateral is liquidated first, if the position is still unhealthy, the rest of the assets are liquidated as well
After liquidation: Your Safe remains operational, and you can continue using the remaining assets either as collateral or for Direct Pay mode spending