Let's talk about the liquidation mechanism today. There is no standard process when your collateral debt ratio falls below a certain level, and someone buys your debt with discount, repays it, and takes your collateral. They are proposing a new system for liquidation.
First of all, if a user's collateral ratio falls below 160%, they are flagged. From that moment, they have 8 hours to restore their ratio to 500%, avoiding liquidation - this is the positive scenario. However, if the user fails to restore it within 8 hours, they receive a 60% penalty on their staked SNX, which is then distributed among other stakers. Additionally, a user can choose to self-liquidate, in which case they face a 50% penalty on their staked SNX.
For spotting someone with a low c-ratio, you can receive 10 SNX on L1 or 1 SNX on L2. For liquidating someone, you get 20 SNX on L1 and 2 SNX on L2. It's worth mentioning that the project doesn't provide a special UI/UX design for liquidation; you need to execute it by calling a function on the smart contract. As a result, most liquidations are currently performed by bots. Show Less
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