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

# Liquidations

Learn how to participate in the liquidations market

<table data-view="cards"><thead><tr><th></th><th></th><th></th><th data-card-target data-type="content-ref"></th></tr></thead><tbody><tr><td></td><td><strong>Contracts</strong></td><td></td><td><a href="/kopio-docs/developers/contracts-overview.md">Contracts Overview</a></td></tr><tr><td></td><td><strong>Addresses</strong></td><td></td><td><a href="/kopio-docs/contracts/deployment-addresses.md">Deployment Addresses</a></td></tr><tr><td></td><td><strong>Protocol Repository</strong></td><td></td><td><a href="https://github.com/kopio-dev/kopio-protocol">https://github.com/kopio-dev/kopio-protocol</a></td></tr></tbody></table>

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**This documentation is a work in progress!**
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## Overview

[Liquidations](/kopio-docs/fundamentals/liquidations.md) of unhealthy [CDP](/kopio-docs/fundamentals/cdps.md)'s within the protocol can be done by anyone and the protocol incentivizes it.

Liquidators must obtain equal amount of the Kopio Asset repaid on behalf of the liquidatee. These [Kopio Assets](/kopio-docs/fundamentals/kresko-assets.md) are burned and the debt balance of the liquidatee is reduced accordingly. Protocol then calculates the amount of collateral to seize, removes it from the liquidatees [collateral deposits](/kopio-docs/fundamentals/collateral-assets.md#collateral-deposit-value) and transfers it to the liquidators address.

When a liquidator repays debt on the unhealthy CDP, in return they receive the liquidatees collateral at a discount according to the [*Liquidation Incentive*](/kopio-docs/fundamentals/glossary.md). This rewards the liquidators in exchange for the repayment cost and effort.

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[Example Liquidation](/kopio-docs/fundamentals/liquidations.md#liquidation-example-2)
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### Liquidation Threshold

Thing to understand in liquidations is the difference between [Liquidation Threshold](#liquidation-threshold) (LT) and the [Minimum Collateralization Ratio](/kopio-docs/fundamentals/cdps.md#minimum-collateralization-ratio) (MCR).

An account in the protocol is considered *liquidatable* when the ratio of collateral to debt is less than the LT. MCR is used to decide whether the CDP is allowed to take on more debt. While MCR is similar to the LT, it won't make an account liquidatable. The possible gap between these ratios is a safety buffer and it prevents users from creating extremely risky positions which would get liquidated in the slightest market movement.

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**TL;DR**

* Accounts can be liquidated below LT.
* Accounts can only be liquidated up to the [MLR](/kopio-docs/fundamentals/liquidations.md#maximum-liquidation-ratio).
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## Acquiring Kopio Assets

Three main options exist to natively acquire Kopio Assets.

1. [Borrowing](/kopio-docs/fundamentals/cdps/icdp/minting-borrowing.md) the assets from the protocol against collateral.
2. Provide underlying assets for a 1-1 [synth wrap](/kopio-docs/fundamentals/synth-wrap.md).
3. Acquire [ONE](/kopio-docs/fundamentals/kiss.md) with USDC, optionally exchange acquired ONE using the [SCDP](/kopio-docs/fundamentals/cdps/scdp.md) to any Kopio Asset.
4. Buy the assets from some 3rd party AMM liquidity.

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Liquidation call *does not* touch liquidators debt, as it would be a double spend.

This means using the protocol to acquire Kopio Assets will leave the liquidator with a regular CDP after the liquidation call.
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All protocol code is public on GitHub

[h](https://github.com/kopio-dev/kopio-protocol)[ttps://github.com/kopio-dev/kopio-protocol](https://github.com/kopio-dev/kopio-protocol)
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