# What is a liquidation in DeFi?

A liquidation sells part of a borrower’s collateral to repay their loan when the collateral is no longer worth enough to cover it safely.

## How it works on Rujira

When a loan’s adjusted loan-to-value reaches 100%, part of the collateral is sold on Rujira’s orderbook to repay part of the loan, until the position is safe again. Rujira charges a 1% liquidation fee and a 0.5% liquidator fee on the repaid debt.

Anyone can bid on liquidated collateral in Rujira’s public liquidation auction, at up to 30% below the market price, depending on the bids already waiting.

## What a public wallet gives away

A loan in a public wallet shows exactly how close it is to liquidation. Traders can watch it and push the price toward it.

## In Redacted

From a Redacted private account you can borrow without your loan pointing to you, and bid on liquidations without your bids pointing to your wallet.

More: [Bid on liquidations privately](https://redacted.gg/private/liquidations/)

## Related terms

- [Loan-to-value (LTV)](https://redacted.gg/glossary/loan-to-value.md): Loan-to-value compares what you owe with what your collateral is worth. Borrowing $50 against $100 of Bitcoin is an LTV of 50%, and the higher it gets, the closer the loan is to liquidation.
- [Price oracle](https://redacted.gg/glossary/price-oracle.md): A price oracle brings market prices onto a blockchain so that smart contracts can use them, for example to value collateral and decide when a loan gets liquidated.
- [Money market](https://redacted.gg/glossary/money-market.md): A money market lets people lend coins to earn interest and lets others borrow them against collateral, with rates that rise as more of a coin is borrowed.
- [Orderbook](https://redacted.gg/glossary/orderbook.md): An orderbook lists every open order to buy or sell at a set price. A limit order waits on the book until the market reaches its price, instead of trading at whatever the price is right now.

Sources: [RUJI Liquidations, Rujira documentation](https://docs.rujira.network/core-products/ruji-liquidations)
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Page: https://redacted.gg/glossary/liquidation/