Account Health & Liquidation
Maintaining solvency is the foundation of Moar Market. Every Credit Account must remain healthy — meaning it holds enough asset value to justify its outstanding debt — across all pools it borrows from. This is enforced through real-time on-chain checks using live oracle prices.
✅ What Makes a Position Healthy?
A Credit Account is considered healthy if the value of its total assets is greater than or equal to the minimum required collateral based on its borrowings.
This minimum is calculated per asset and pool using Loan-to-Value (LTV) ratios.
Let:
Dp= total debt from poolpLTVpa= loan-to-value ratio for assetain poolp
Then: Minimum required asset value = ∑ (Dp / LTVpa)
This ensures that a user’s Credit Account always holds more asset value than the debt it owes, adjusted for risk via LTVs.
📊 Understanding LTV and Leverage
Each (pool, asset) pair has its own LTV ratio. It defines the maximum borrowing power of a given asset within a specific pool.
For example, an LTV of 80% means that for every $100 worth of that asset, the user can borrow up to $80 from that pool.
Leverage derived from LTV is calculated as: Leverage = LTV / (1 - LTV)
Different pools may configure different LTVs for the same asset, reflecting varying risk tolerances.
⚠️ Liquidations
If a Credit Account becomes unhealthy, it becomes eligible for liquidation — a process where a whitelisted liquidator repays the outstanding loan and seizes a discounted value of the account’s assets in return.
This protects the protocol from insolvency and ensures lenders are not exposed to bad debt.
🔧 How It Works
A Credit Account typically becomes unhealthy due to:
A decline in the value of held assets, based on real-time oracle prices
An increase in the value of borrowed assets, raising the real debt burden
Accrued interest increasing total debt beyond collateral value
Once unhealthy:
A whitelisted liquidator repays the full outstanding debt
In return, they receive account assets worth slightly more than the repaid value, based on a liquidation bonus (e.g. 5%)
💡 Example
Suppose:
A Credit Account owes $1,000 USDC
The pool defines a 5% liquidation bonus
A liquidator:
Repays $1,000 USDC
Receives $1,050 worth of assets from the account (valued at oracle price)
This closes the debt, secures the protocol, and rewards the liquidator for assuming the liquidation risk.
🔐 Safety Enforcement
All outbound actions — borrowing, transferring, withdrawing, or exiting strategies — are blocked unless the Credit Account remains healthy after the action.
This ensures that only price changes or interest growth can cause liquidations, and not direct user actions.
Last updated