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Liquidations are what keeps lenders whole. When a position’s debt outgrows the allowed fraction of its collateral, anyone can repay the debt and take collateral in exchange — at a discount that makes doing so worthwhile.

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When a position becomes liquidatable

The moment its debt exceeds the LLTV fraction of collateral value at the current oracle price — that is, health factor below 1.0. Nothing about it is discretionary: the threshold is fixed in each market’s immutable parameters, and the check runs on a price everyone can see.

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Anyone can liquidate

Liquidation on Denar is fully permissionless — any address holding USDG can liquidate an unhealthy position. Denar operates its own bot for reliability, but it holds no privilege whatsoever: it competes on pure speed. This is worth stating because it is not a given in this asset class. RWA platforms whose collateral carries transfer restrictions must gate liquidations to approved parties. Robinhood Chain’s stock tokens are freely transferable ERC-20s, so Denar keeps the stronger, open model.
For would-be liquidators: there is nothing to sign up for. Monitor positions; when one crosses the threshold, repay its debt through the protocol and receive collateral plus the bonus in one transaction. Robinhood Chain has first-come-first-served ordering with no public mempool — winning is purely about being fast. Exit liquidity for seized collateral routes through Rialto and Uniswap.

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The liquidation bonus

The bonus is fixed per market by a formula tied to its LLTV — riskier markets pay liquidators more: The bonus comes out of the borrower’s collateral — one more reason not to ride positions near the threshold.

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When collateral no longer covers the debt

A violent move — canonically, a weekend gap past the LLTV buffer — can leave a position underwater: collateral worth less than debt. Denar handles this explicitly rather than letting such positions rot:
  1. A liquidator seizes the entire remaining collateral.
  2. The uncovered remainder of the debt is written off against the lenders of that market — immediately, transparently, and only there.
Isolation and the per-market caps bound the loss; no other market is touched. Denar’s own bot detects this case and executes it automatically, because a recognized loss is strictly better for lenders than a phantom debt that silently grows.

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Liquidations pause with the oracle

While a market’s price is paused — corporate action, stale feed — liquidations pause with it. Liquidating on an untrustworthy price could seize collateral from positions that are actually healthy, which is worse than waiting. When the price returns, liquidations resume at the fresh price.
For borrowers, the flip side never pauses: repaying and adding collateral work around the clock, in every protocol state. If you’re drifting toward liquidation, those are your two exits — and they’re always open.