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.
Major market volatility can decrease collateral values, so liquidations carry inherent risks. Moderate position sizes accordingly.
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.
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.
If auctions yield insufficient bids, Unlockd utilizes external liquidators to recover debts while minimizing losses, only for those assets with no bids.
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