Risk and Clearing

If the value of an account's outstanding loan exceeds its borrowing capacity, a portion of that loan can be exchanged at the current market rate minus a liquidation discount. The exchange will be at the current market price minus the liquidation discount. This measure should reduce the vulnerability of borrowers and help grow the ecosystem. The portion of debt that can be closed is part of the borrowed assets. It ranges from 0 to 1 and is known as the closeness factor. This exchange can take place as long as the borrowing capacity and the loan are not equal. The clearing mechanism, as assets, prices and users, is written in the Centauri Finance agreement and is not affected by any third party.

Liquidation is performed with CFH tokens as collateral. If the collateral includes CFH tokens as well as the main collateral, the balance of the borrower's CFH tokens will be reduced by a locked amount. The progress of the liquidation process can continue to be called until the user's borrowing is lower than his borrowing capacity.