🤯Liquidation

Liquidation happens when the debt-to-value ratio ("Debt Ratio") of the position exceeds certain threshold ("Liquidation Threshold"), such that the position would be closed by our liquidation bot in order to guarantee the debt repayment. It is critical to keep our lending pools safe for the long-term development of the Single Finance ecosystem, as our Pseudo Market-Neutral Strategy relies heavily on borrowing assets to minimize price effect on the farming position.

Both strategy and leveraged yield farming positions have liquidation risks. But in most cases, the strategy position will be capital-protected first instead of being liquidated. You can also reference to position opening form or your portfolio/position section for the safety buffer ("Safety Factor") of each position. The closer the safety factor to zero, the higher the risk of liquidation.

Formula

Debt  Ratio=Debt  ValuePosition  ValueDebt\;Ratio=\frac {Debt\; Value}{Position\;Value}
Safety  Factor=Liquidation  Threshold−Debt  RatioSafety\;Factor=Liquidation\;Threshold-Debt\;Ratio

Let's learn more about our liquidation mechanism with the following example.

Example

Alice decides to farm in TokenA-TokenB liquidity pool, when the price of TokenA is US$2 and that of TokenB is US$0.5:

  1. Alice opens a TokenA-TokenB leveraged yield farming position, supplying 5,000 TokenA (US$10,000) and borrowing 40,000 TokenB (US$20,000) with initial leverage at 3X.

  2. Her supplied assets and borrowed assets are then converted to 50:50 portion for creating the LP tokens, such that there are total 7,500 TokenA (US$15,000) and 30,000 TokenB (US$15,000) in her initial position. Total position value remains unchanged at US$30,000.

  3. Current debt ratio of her position is US$20,000 / US$30,000 = 66.67%.

After 1 day, assume there are no trading fee and yield farming reward reinvested, the price of TokenA drops to US$1.5 and the price of TokenB raises to US$0.6:

  1. Alice's position now has roughly 9,486.83 TokenA and 23,717.08 TokenB, according to Constant Product Formula (a*b = k). Total position value now becomes US$28,460.50 (i.e. 9,486.83 TokenA * US$1.5 + 23,717.08 TokenB * US$0.6).

  2. Total debt value now becomes US$24,000 (i.e. 40,000 TokenB * US$0.6).

  3. Now the debt ratio of this position would be US$24,000/ US$28,460.50= 84.32%.

  4. Since the liquidation threshold of this pair is 83.33%, it will trigger the liquidation bot to close the position.

  5. The net equity value before paying liquidation fee will be US$4,460.5. After paying 5% fee, Alice will receive 2,824.98 TokenA (~US$4,237.47) in her wallet.

Liquidation Parameters

Work Factor: The maximum Debt Ratio when opening a position on a pair Max. Leverage: The maximum Leverage Level when opening a new position on a pair Liquidation Threshold: The maximum Debt Ratio when the liquidation will be executed

(Cronos) VVS Pools

PoolWork Factor (Max. Leverage)Liquidation Threshold

CRO-USDC

80.00% (5.0x)

92.50%

USDC-USDT

75.00% (4.0x)

90.00%

SINGLE-VVS

66.67% (3.0x)

83.33%

SINGLE-USDC

66.67% (3.0x)

83.33%

ARGO-USDC

66.67% (3.0x)

83.33%

VVS-USDC

66.67% (3.0x)

83.33%

VVS-VERSA

66.67% (3.0x)

83.33%

CRO-VVS

66.67% (3.0x)

83.33%

CRO-SKY

66.67% (3.0x)

83.33%

CRO-NESS

66.67% (3.0x)

83.33%

CRO-ALI

66.67% (3.0x)

83.33%

CRO-AKT

66.67% (3.0x)

83.33%

VVS-TONIC

66.67% (3.0x)

83.33%

VVS-V3S

66.67% (3.0x)

83.33%

CRO-WBTC

66.67% (3.0x)

83.33%

CRO-ETH

66.67% (3.0x)

83.33%

CRO-VSHARE

66.67% (3.0x)

83.33%

CRO-APE

66.67% (3.0x)

83.33%

CRO-ATOM

66.67% (3.0x)

83.33%

CRO-TONIC

66.67% (3.0x)

83.33%

CRO-USDT

66.67% (3.0x)

83.33%

VVS-USDT

66.67% (3.0x)

83.33%

CRO-DAI

66.67% (3.0x)

83.33%

CRO-SHIB

60.00% (2.5x)

80.00%

CRO-DOGE

60.00% (2.5x)

80.00%

CRO-ELON

50.00% (2.0x)

70.00%

(Cronos) MMF Pools

PoolWork Factor (Max. Leverage)Liquidation Threshold

CRO-USDC

80.00% (5.0x)

92.50%

MUSD-USDC

80.00% (5.0x)

90.00%

USDC-USDT

75.00% (4.0x)

90.00%

DAI-USDC

75.00% (4.0x)

90.00%

CRO - BCRO

75.00% (4.0x)

90.00%

SINGLE-USDC

66.67% (3.0x)

83.33%

MMF-MUSD

66.67% (3.0x)

83.33%

CRO-MUSD

66.67% (3.0x)

83.33%

CRO-USDT

66.67% (3.0x)

83.33%

MMF-USDC

66.67% (3.0x)

83.33%

MMF-USDT

66.67% (3.0x)

83.33%

MMF-CRO

66.67% (3.0x)

83.33%

ETH-CRO

66.67% (3.0x)

83.33%

MMO-CRO

66.67% (3.0x)

83.33%

WBTC-CRO

66.67% (3.0x)

83.33%

MIMAS-CRO

66.67% (3.0x)

83.33%

(Arbitrum) SushiSwap Pools

PoolWork Factor (Max. Leverage)Liquidation Threshold

WETH-USDC

66.67% (3.0x)

83.33%

WETH-USDT

66.67% (3.0x)

83.33%

ARB-ETH

66.67% (3.0x)

83.33%

MAGIC-ETH

66.67% (3.0x)

83.33%

(Fantom) SpookySwap Pools

PoolWork Factor (Max. Leverage)Liquidation Threshold

USDC-FTM

80.00% (5.0x)

92.50%

USDC-TUSD

75.00% (4.0x)

90.00%

USDC-MAI

75.00% (4.0x)

90.00%

USDC-BOO

66.67% (3.0x)

83.33%

FTM-wETH

66.67% (3.0x)

83.33%

fUSDT-FTM

66.67% (3.0x)

83.33%

FTM-DAI

66.67% (3.0x)

83.33%

FTM-MIM

66.67% (3.0x)

83.33%

FTM-BOO

66.67% (3.0x)

83.33%

FTM-BTC

66.67% (3.0x)

83.33%

FTM-BNB

66.67% (3.0x)

83.33%

FTM-LINK

66.67% (3.0x)

83.33%

CRV-FTM

66.67% (3.0x)

83.33%

FTM-SUSHI

66.67% (3.0x)

83.33%

FTM-AVAX

66.67% (3.0x)

83.33%

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