> For the complete documentation index, see [llms.txt](https://docs.vena.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.vena.finance/for-users/liquidations.md).

# Liquidations

Liquidation is the mechanism by which Vena closes undercollateralised positions. It's mechanical and automated; the protocol does not pause or intervene on a case-by-case basis.

## When liquidation happens

A position becomes eligible for liquidation when its **health factor drops below 1**.

Health factor can drop for several reasons:

* The collateral asset's price falls.
* The borrowed asset's price rises relative to collateral.
* Accrued borrow interest pushes the debt above the collateral's buffer over time.
* The user toggles an asset off as collateral or withdraws collateral.

Once below 1, the position is open to liquidators. Liquidators compete to close risky positions quickly; in practice, liquidations typically execute within blocks of the threshold being crossed.

## The liquidation penalty

A liquidator repays a portion of the debt and receives collateral in return at a discount. The dapp labels this discount the **liquidation penalty** — a penalty from the borrower's perspective, a bonus from the liquidator's.

Illustrative mechanics:

* A position has $1,000 of ETH collateral and $850 of stablecoin debt; health factor drops below 1.
* A liquidator repays $425 of the debt (up to half, the maximum liquidation amount per call).
* The liquidator receives ETH worth $425 plus the penalty — for example, at 5%, $446.25 of ETH.
* The position's collateral falls to \~$553.75 and its debt to $425. Health factor typically rises back above 1.

The penalty is what compensates liquidators for closing risky positions quickly. It is set per asset by the curator. See [Parameter reference](/asset-parameters/parameter-reference.md).

Liquidation clears just enough debt to restore health. It does not wipe the entire position unless the position is very deep underwater.

## How to avoid liquidation

Staying above a health factor of 1 is a matter of monitoring and reacting before it gets close:

* **Keep a buffer.** A health factor of 1.5 or more absorbs typical price moves. Tighter buffers require more active management.
* **Top up collateral** before a price drop gets worse. Additional supplied collateral lifts the health factor immediately.
* **Repay part of the debt** to reduce the debt side of the ratio.
* **Borrow less initially.** The simplest way to stay safe is to leave more headroom when opening the position.
* **Watch volatile markets closely.** Stablecoin collateral is typically more stable; volatile assets can move several percent in a session.

Vena does not offer grace periods, warnings, or last-minute interventions. Staying above a health factor of 1 is the only defence.

## Monitoring your health factor

The health factor is displayed on the dashboard at all times and updates in real time. See [Manage your position](/for-users/manage-position.md) for the full dashboard tour.

For off-chain monitoring, users can set alerts via wallet tools, portfolio trackers, or custom scripts that read the health factor from the protocol's data provider.


---

# 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://docs.vena.finance/for-users/liquidations.md?ask=<question>&goal=<user_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.