Liquidation protection

Liquidations are limited only to the amount necessary to cure default.

Borrowers are protected against excessive liquidations. The amount that can be liquidated through the batchLiquidationfunction cannot exceed the minimum amount necessary to bring the borrower's margin ratio back to the initial margin ratio (in the case of margin deficit) and the minimum amount necessary to cover a borrower repurchase price (in the case of failure to repay) after adjusting for liquidated damages. This is in contrast to arbitrary close factors found in other lending protocols and should protect against excessive liquidations.

Liquidation protection will be enforced only to the extent the fair market value of collateral less a borrower's outstanding repurchase obligation exceeds the de minimis collateral threshold to avoid an infinite liquidation loop.