# Liquidators

As a liquidator on Unlockd, you play a vital role in upholding the stability and integrity of the lending ecosystem. 

When a borrower's collateral value dips below the minimum threshold, triggering liquidation, your job is to strategically participate in the process to acquire discounted assets while also ensuring lenders are protected.

## Monitoring Loans and Identifying Opportunities

* **Check Loan List:** Regularly monitor the list of active loans sorted by health factor. Focus on those nearing or below the critical 1.0 threshold, as they present liquidation opportunities.
* **Custom Alerts**: Set up notifications for specific loan health factor milestones. When a loan you're tracking falls below a particular level, you'll get an alert so you can take swift action.
* **Analyze Collateral**: Scrutinize the collateral assets of at-risk loans. Estimate their value based on current market conditions and intrinsic traits like rarity. This allows you to strategize your bids effectively during liquidation.
* **Timing:** Closely follow market trends, major events, and protocol changes that could impact asset values. Liquidity events often present increased liquidation opportunities.

{% content-ref url="../protocol-mechanics/notifications" %}
[notifications](https://docs.unlockd.finance/protocol-mechanics/notifications)
{% endcontent-ref %}

{% hint style="warning" %}
Major market volatility can decrease collateral values, so liquidations carry inherent risks. Moderate position sizes accordingly.
{% endhint %}

## Participating in Liquidation Auctions

* **Bid Strategizing**: Determine your auction bids based on current collateral valuations and the starting bid, which is either the appraisal or the Critical Recovery Threshold (CRT).
* **Bid Now, Pay Later:** Utilize this feature to bid on collateral RWAs without fully paying upfront. The RWAs become collateral for a new loan issued by Unlockd.
* **Binding Bids**: Understand that your bids are binding on-chain transactions, ensuring auction integrity. The bid amount goes directly to debt reduction.
* **Monitor Auction Dynamics**: Follow the auction closely as it progresses. Higher bids repay earlier bidders and further reduce outstanding debt.
* **Incentive Rewards**: If your bid gets outbid, you receive a 2.5% reward on the bid amount for initiating the auction.

{% content-ref url="../protocol-mechanics/liquidations/liquidation-process" %}
[liquidation-process](https://docs.unlockd.finance/protocol-mechanics/liquidations/liquidation-process)
{% endcontent-ref %}

{% content-ref url="../protocol-mechanics/marketplace/bid-now-pay-later" %}
[bid-now-pay-later](https://docs.unlockd.finance/protocol-mechanics/marketplace/bid-now-pay-later)
{% endcontent-ref %}

## Managing Liquidated Assets

* **Claiming assets**: After winning an auction, manually claim the assets. This transfers ownership to you.
* **Timing Liquidations**: Consider market conditions and optimal timing when liquidating acquired assets to maximize profits.
* **Capitalize on Discounts:** If you can sell liquidated assets above the purchase price, you profit from the discount acquired at auction.

{% hint style="info" %}
If auctions yield insufficient bids, Unlockd utilizes external liquidators to recover debts while minimizing losses, only for those assets with no bids.
{% endhint %}