A lending position joins a collateral asset to a debt claim. Maximum loan-to-value limits new borrowing; the later liquidation threshold decides when a third party may repay debt and seize collateral.
This educational model uses exact decimal arithmetic and simple interest. It does not reproduce a named protocol, oracle delay, close-factor policy, auction, bad-debt waterfall, or gas cost.
Current position
The borrower deposited 10 ETH worth 20,000.00 USD and borrowed 12,000.00 USD. After 0.5 years, debt is 12,360.00 USD, LTV is 61.80%, health factor is 1.375×, and the liquidation price is 1,454.12 USD per ETH. The position remains below maximum LTV with a health factor above the warning boundary.
Risk over time
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Current price: 2000 USD per ETH. Debt is 12,360.00 USD, LTV is 61.80%, health factor is 1.375×, and the position is safe.
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| Step | Changed input | Debt | LTV | Health factor | State |
|---|---|---|---|---|---|
| Current price | 2000 USD per ETH | 12,360.00 USD | 61.80% | 1.375× | Safe |
| −5% price | 1900 USD per ETH | 12,360.00 USD | 65.05% | 1.307× | Safe |
| −10% price | 1800 USD per ETH | 12,360.00 USD | 68.67% | 1.238× | Warning |
| −15% price | 1700 USD per ETH | 12,360.00 USD | 72.71% | 1.169× | Warning |
| −20% price | 1600 USD per ETH | 12,360.00 USD | 77.25% | 1.100× | Warning |
| −25% price | 1500 USD per ETH | 12,360.00 USD | 82.40% | 1.032× | Warning |
| −30% price | 1400 USD per ETH | 12,360.00 USD | 88.29% | 0.963× | Liquidation eligible |
| −35% price | 1300 USD per ETH | 12,360.00 USD | 95.08% | 0.894× | Liquidation eligible |
| −40% price | 1200 USD per ETH | 12,360.00 USD | 103.00% | 0.825× | Liquidation eligible |
| −45% price | 1100 USD per ETH | 12,360.00 USD | 112.36% | 0.756× | Liquidation eligible |
| −50% price | 1000 USD per ETH | 12,360.00 USD | 123.60% | 0.688× | Liquidation eligible |
| −55% price | 900 USD per ETH | 12,360.00 USD | 137.33% | 0.619× | Liquidation eligible |
| −60% price | 800 USD per ETH | 12,360.00 USD | 154.50% | 0.550× | Liquidation eligible |
Position ledger
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| Metric | Value | Unit | Meaning |
|---|---|---|---|
| Collateral value | 20,000.00 | USD | Collateral amount × current price |
| Debt after interest | 12,360.00 | USD | Principal plus simple accrued interest |
| LTV | 61.80% | percent | Debt ÷ collateral value |
| Health factor | 1.375× | ratio | Liquidation-adjusted coverage |
| Remaining borrowing capacity | 2,640.00 | USD | Zero-floored capacity at maximum LTV |
| Liquidation price | 1,454.12 | USD per ETH | Price where health factor reaches 1 |
| Interest accrued | 360.00 | USD | Principal × annual rate × elapsed years |
| Collateral seized | 0 | ETH | Not eligible |
| Debt repaid in liquidation | 0.00 | USD | Capped by debt, request, and collateral |
| Debt remaining after liquidation | 12,360.00 | USD | Debt not repaid by this transition |
Three system perspectives
Each view combines a written explanation, patterned direction cue, and inspectable table.
Assets move into and out of the lending protocol: collateral enters, borrowed assets leave, and seized collateral can move to liquidators.
| From | To | Value or rule |
|---|---|---|
| Borrower | Lending protocol | 10 ETH collateral |
| Lending protocol | Borrower | 12,000.00 USD borrowed |
| Lending protocol | Liquidator | 0 ETH seized if eligible |
The protocol holds a debt claim while the borrower retains a residual claim on collateral after valid debt and liquidation transfers.
| From | To | Value or rule |
|---|---|---|
| Lending protocol | Borrower | 12,360.00 USD repayment claim |
| Borrower | Protocol collateral account | Residual claim on 10 ETH before liquidation |
Price declines and interest accrual weaken coverage until the liquidation rule allows a liquidator to repay debt and seize collateral.
| From | To | Value or rule |
|---|---|---|
| Collateral market | Position | 2,000.00 USD per ETH current price |
| Interest clock | Debt claim | 360.00 USD accrued |
| Position | Liquidator | Liquidation eligibility is inactive |
Instantaneous downside
Elapsed time and debt stay fixed while collateral price falls.
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| Shock | Price | Collateral value | LTV | Health factor | State |
|---|---|---|---|---|---|
| 10% price decline | 1,800.00 USD/ETH | 18,000.00 USD | 68.67% | 1.238× | Safe |
| 25% price decline | 1,500.00 USD/ETH | 15,000.00 USD | 82.40% | 1.032× | Above maximum LTV |
| 40% price decline | 1,200.00 USD/ETH | 12,000.00 USD | 103.00% | 0.825× | Liquidation eligible |
Claim settlement
The interface requests full outstanding debt; the core model caps repayment and seizure.
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| Position account | Before | Liquidation action | After |
|---|---|---|---|
| Collateral asset | 10 ETH | 0 ETH seized | 10 ETH |
| Debt claim | 12,360.00 USD | 0.00 USD repaid | 12,360.00 USD |
| Borrower claim | Residual claim on deposited collateral | Not eligible | Residual claim on collateral remaining |
| Liquidator position | No claim before eligibility and repayment | Repays debt and receives collateral plus bonus | Receives 0 ETH |
Guided comparison
Compare a healthy position with price-driven and interest-driven liquidation.