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A position becomes liquidatable when its borrowed assets exceed the value allowed by its collateral and market LLTV. A liquidator repays some or all of the borrower’s debt and receives collateral in return. The core applies a liquidation incentive derived from the market LLTV, subject to the implementation’s cap. Liquidation calls can specify either the amount of collateral to seize or the borrow shares to repay. Liquidations are permissionless: the protocol does not assign a specific liquidator. Successful execution depends on a third party detecting the position and obtaining the loan asset needed for repayment.

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Oracle freshness

Rhizome’s guarded market oracle reverts when a monitored feed is stale or invalid. Because liquidation requires a price, a stale feed freezes liquidation for that market until a valid, fresh price is available. Borrowers can still repay debt.

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Shortfall

If seized collateral cannot cover all debt, the core can recognize the remaining amount as bad debt. That loss reduces the assets backing lenders’ supply shares in the affected market. TODO: Document production liquidation service availability and supported execution routes when they are publicly operated and verified.