Liquidation

This section explains the liquidation process on the TSI platform, which occurs when a borrower's collateral value falls below a certain threshold, triggering a risk mitigation process to protect lenders.

Overview of Liquidation Process

Liquidation

1. Market Monitoring and Trigger: The TSI system continuously monitors the market price of collateralized assets. If the value of the collateral falls below a predefined threshold (the liquidation trigger), the system automatically initiates the liquidation process.

2. Liquidation Broadcast: TSI broadcasts the liquidation event to all eligible liquidators on the platform. This broadcast includes details of the collateralized tokens, the amount to be liquidated, and the proposed liquidation price.

3. Liquidator Notification: Liquidators receive notifications about liquidation events and can view the details, including the proposed prices, on the Liquidation Dashboard.

4. Claiming a Liquidation Trade: A liquidator can claim a liquidation trade by clicking "Claim Trade" on a selected liquidation event. This action locks the liquidation opportunity for that specific liquidator, preventing others from claiming the same trade. The liquidator then selects a wallet to transfer the payment to the lender in exchange for the collateral.

5. Payment Transfer: Within 12 hours of claiming the trade, the liquidator should transfer the payment to the lender's wallet.

6. Lender Notification: Once the liquidator signs the payment transaction, the lender receives a notification and can view the transfer record in their Transfers list.

7. Collateral Transfer: Upon receiving the payment, the lender should transfer the corresponding collateral to the liquidator's wallet within 12 hours.

8. Transaction Monitoring: Both the liquidator and lender can monitor the status of the liquidation transactions in the Transfers page.

Liquidator Initiates a Liquidation Trade at the Accepted Price

Lender Transfers Collateral to Liquidator in Exchange for Payment

Liquidation and Maturity Time

In situations where liquidation occurs near the loan maturity time, the 12-hour windows for both the liquidation process and the loan repayment process run concurrently. This ensures that both the liquidation and the repayment/collateral return can be completed within the required timeframes.

Important Notes

• Liquidators should carefully evaluate the liquidation price and collateral details before claiming a trade.

• Timely completion of transactions within the 12-hour windows is crucial for both liquidators and lenders to avoid penalties or complications.

• If any issues arise during the liquidation process, users should contact TSI support for assistance.