# Liquidation

Your CDPs will be liquidated when the position collateral ratio falls below liquidation threshold(MCR). Maximum liquidation amount is calculated so that the CDP's CR is at least 5% more than MCR to better protect borrowers' interest, unlike protocols such as AAVE and Compound, in which a CDP can be liquidated as much as 50% of its debt. Liquidation will increase MCR of liquidated CDP,

![](https://3227338076-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fn262PLtizMqtNJu9DRnQ%2Fuploads%2F4Lx3DkA9eQkN1nnfaPL8%2Fimage.png?alt=media\&token=faf180f6-2ff9-45c1-bb0f-44d8be1df574)

#### Liquidation bonus for liquidators

There is a penalty to borrowers when CDPs are liquidated, the penalty is rewarded to liquidator as liquidation bonus. 

#### Liquidation bonus for **liquidity providers**

Liquidation bonus = LPP \* liquidated debt amount, bonus is paid in form of collateral.

#### LPP = Liquidation Penalty Percentage

LPP is not fixed, when a CDP reaches its MCR threshold, LPP will increase by 1% for every 1% CR(Collateral Ratio) drop,  actual LPP = LPP Base + (MCR-CR).

For CDPs with multi-collateral, LPP Base = ($Collateral A \* BaseA + $CollateralB \* BaseB)/($Collateral A + $CollateralB)

<table><thead><tr><th width="150">Collateral Type</th><th width="150">LPP Base</th><th data-hidden>Liquidation Bonus</th><th data-hidden></th></tr></thead><tbody><tr><td>WBTC</td><td>5%</td><td>10%</td><td></td></tr><tr><td>WETH</td><td>5%</td><td>10%</td><td></td></tr><tr><td>APT</td><td>5%</td><td></td><td></td></tr><tr><td>Sui</td><td>5%</td><td></td><td></td></tr><tr><td>USDC</td><td>3%</td><td>5%</td><td></td></tr><tr><td>USDT</td><td>3%</td><td>5%</td><td></td></tr><tr><td>DAI</td><td>3%</td><td>5%</td><td></td></tr><tr><td>OT</td><td>7%</td><td>15%</td><td></td></tr><tr><td>OSD</td><td>5%</td><td>5%</td><td></td></tr></tbody></table>


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