> For the complete documentation index, see [llms.txt](https://guide.dem.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://guide.dem.exchange/earn/nitron-lend-and-borrow/liquidations.md). # Liquidations ### How liquidations occur When users lend assets, and collateralize it to borrow other assets, the collateral is at risk of liquidation. If the price of the collateralized assets moves against the borrowed assets, it may be liquidated or sold off to repay the loan. Users can monitor their position through their health factor. When a user's health factor falls below the [liquidation threshold](https://guide.carbon.network/features/money-market/risk-management-parameters#liquidation-threshold) and their position has become unviable, they are at risk of liquidation. You can prevent liquidation, by lending out more collateral or returning your loan to stabilise your position. ### How much can be liquidated The maximum amount that can be liquidated is determined by the maximum amount of collateral that can be liquidated by the protocol to repay the outstanding debt. There is no minimum amount that can be liquidated for a risky position. {% hint style="info" %} Visit the Carbon Guide for more technical details on maximum liquidation amount [here](https://guide.carbon.network/features/money-market/functionalities-of-money-market/liquidate/maximum-liquidation-amount). {% endhint %} ### Liquidate risky positions to earn liquidation bonuses Normally, this liquidation is done by bots to ensure the robustness and safety of the money market. However this leads to the bots monopolizing the liquidation bonuses. In the true spirit of DeFi, Demex is providing an open liquidation market for users to take part in liquidation and earn a liquidation bonus. Anyone can become a liquidator by repaying the debt and seizing the borrower’s collateral at a discounted rate. This discounted rate is the liquidation bonus that we refer to, i.e., the difference in the actual value of the collateral and the discounted amount you pay for it. Whenever a collateral’s health factor drops below 1, it becomes undercollateralized and anyone can liquidate the loan by repaying the debt and taking the borrower’s collateral at a discounted rate. This discounted rate is also referred to as a liquidation bonus, the difference in the actual value of the collateral and the discounted amount the user pays for it. The user can select the debt they want to repay as long as they have a sufficient amount in their wallet, and which collateral they want to receive in exchange for repaying the debt. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters: ``` GET https://guide.dem.exchange/earn/nitron-lend-and-borrow/liquidations.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.