# Hybrid Liquidation Model ### **How do liquidations work?** Hubble uses a hybrid liquidation model that relies on funds in the USDH vault, as well as on bots that facilitate market based liquidations. ### USDH Vault Liquidations Hubble's original liquidation model utilized only the USDH Vault to fund liquidations. When a position reaches a Vault's maximum LTV, the user's debt is settled via the USDH that is staked in the USDH vault. The USDH Vault stakers then receive the liquidated borrower's collateral assets at a discount, meaning that the Dollar value of the collateral received by a USDH staker will be worth more than the USDH that was burnt from their USDH Vault position. This discount would typically be around 10%. Liquidations on the original Hubble Vault is still funded via the USDH Vault, though newly onboarded assets and vaults will be subject to market-based liquidations. ### **Market-based Liquidations** Going forward, any assets that are being onboarded to Hubble will be liquidated by bots on the open market. By offering liquidators a discount on collateral assets, they will be incentivized to settle the debt on loans. In the market-based liquidation model, liquidators will receive the majority of user collateral, with the exact % depending on the vault LTV. In this model, USDH Vault stakers still receive x% of user collateral. However, this % earning is now risk free, as USDH stakers do not lose any USDH in the process. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.hubbleprotocol.io/faq/liquidations/hybrid-liquidation-model.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.