Liquidation

An explanation of the liquidation process.

Should the borrower not repay the loaned amount within the specified time frame, the smart contract will auto-liquidate the provided collateral.

This process occurs immediately after the timer for the repayment window reaches zero.

Once liquidated, the collateral gets sold for ETH - 50% of which gets added to the smart contract for lending, with the other 50% distributed equally among $mefi holders (distribution will occur once we've collected a certain amount of ETH).

Note: While this is not in place at this time, in the future we will add a feature that will auto-liquidate the provided collateral should it suffer a significant price drop (see Price-Based Liquidation).