Documentation Index
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When a borrower’s health crosses liquidationThresholdPct, their position becomes liquidatable. klend exposes a set of curator-tunable parameters governing how aggressively liquidations happen and how much liquidators earn for clearing positions.
This page covers the market-level and reserve-level fields that shape liquidator behavior. For threshold setting and IR curve choices, see Risk parameters. For the auto-deleverage (margin call) mechanism, see Auto-deleverage.
The liquidation flow at a glance
When a borrower’s LTV crosses liquidationThresholdPct, the position becomes liquidatable. Any wallet can call liquidate-obligation-and-redeem-reserve-collateral against it. In a single instruction, the liquidator repays up to close_factor × debt, seizes collateral of equal value plus the configured bonus, and the obligation is restored at or above the liquidation threshold. Liquidations are permissionless: the program holds the safety net, an open market of liquidators races to act on it.
Close factor and value caps (market-level)
Tunables on LendingMarket:
{
"liquidation_max_debt_close_factor_pct": 25,
"max_liquidatable_debt_market_value_at_once": "<u64>",
"min_full_liquidation_value_threshold": "<u64>",
"min_value_skip_liquidation_ltv_checks": "<u64>",
"min_value_skip_liquidation_bf_checks": "<u64>"
}
| Field | What it does |
|---|
liquidation_max_debt_close_factor_pct | Maximum portion of debt a liquidator can repay in a single liquidation, in percent. Default 25 means a borrower’s position can be liquidated by 25% per round. Lower values protect borrowers from one-shot wipeout; higher values let liquidators clear damaged positions faster |
max_liquidatable_debt_market_value_at_once | Hard ceiling on market-value liquidated per liquidation (in the market’s quote currency, scaled). Throttles whale liquidations to prevent a single liquidator from clearing too much at once |
min_full_liquidation_value_threshold | Below this debt market value, the close-factor cap is bypassed and the entire position can be liquidated. Used to cleanly clear dust positions where partial liquidation is uneconomical |
min_value_skip_liquidation_ltv_checks | Below this market value, the program skips the LTV health check during liquidation. Allows a liquidator to clear a dust position regardless of whether it’s underwater on standard checks |
min_value_skip_liquidation_bf_checks | Same idea for the borrow-factor check |
Tuning the close factor
Default close factor of 25% is sized so a borrower has multiple rounds to add collateral or repay before being fully wiped out. Each liquidation round drives the position back toward health; if the market continues moving against them, subsequent rounds re-engage.
Reasons to deviate:
| Setting | Use case |
|---|
15-25% | Default. Borrower-protective |
30-50% | Faster cleanup of unhealthy positions; appropriate for high-volatility assets where multi-round liquidation creates more risk than it prevents |
100% | Single-round full liquidation. Use only for fixed-term reserves at maturity, or in incident response |
Liquidation bonus (reserve-level)
Liquidator incentive lives on each reserve:
{
"minLiquidationBonusBps": 500,
"maxLiquidationBonusBps": 1000,
"badDebtLiquidationBonusBps": 99,
"protocolLiquidationFeePct": 0
}
| Field | What it does |
|---|
minLiquidationBonusBps | Floor on the bonus a liquidator earns. The actual bonus scales with how unhealthy the position is, but cannot drop below this |
maxLiquidationBonusBps | Cap on the bonus, no matter how unhealthy. Prevents over-liquidation when prices gap |
badDebtLiquidationBonusBps | Bonus applied when the position is in bad debt (debt exceeds collateral value). Higher than normal to incentivize clearing the unrecoverable position |
protocolLiquidationFeePct | Percentage (0–100) of liquidation proceeds that route to protocol fees; the liquidator receives the remainder |
| Asset class | min | max | bad debt |
|---|
| Stablecoins (in eMode) | 100 (1%) | 200 (2%) | 99 (≈1%) |
| Major liquid (SOL, BTC, ETH) | 300–500 (3–5%) | 700–1000 (7–10%) | 99 |
| Long-tail | 500–800 | 1500–2500 | 99 |
Pausing liquidations
{
"price_triggered_liquidation_disabled": 0
}
| Value | Effect |
|---|
0 | Default. Liquidations triggered by price movement are allowed |
1 | All price-triggered liquidations are blocked. Use during oracle incidents to prevent cascading liquidations on bad prices |
borrow_disabled for full incident-mode posture. See Emergency controls.
Liquidations on mature fixed-term debt
{
"mature_reserve_debt_liquidation_enabled": 1,
"obligation_borrow_debt_term_liquidation_enabled": 1,
"term_based_full_liquidation_duration_secs": 0
}
Bad debt and socialized loss
If a position can’t be liquidated cleanly — collateral falls below debt and even the bad-debt bonus doesn’t cover the gap — the curator (or emergency_council) can call socialize-loss to spread the loss across the affected reserve’s depositors.
This is an irreversible, depositor-affecting action. Use it only when:
- The position is genuinely unrecoverable
- All standard liquidation paths have been exhausted
- The affected reserve has a credible loss-recovery plan (insurance, treasury backfill, etc.)
socialize-loss is callable by the lending_market_owner or, if configured, the emergency_council. See Emergency controls.
Reference
