Liquidation Example
First, a user takes a loan:
SOL/USD is $100.0
User Position (debt=100, collateral=2 SOL)
User LTV is: (100 / 200)*100 = 50% LTV
User is safe. Liquidation point is 80% LTV.
Then, SOL price drops:
SOL/USD is $80.0
User Position (debt=100, collateral=2 SOL)
User LTV is: (100 / 160)*100 = 62.5% LTV
User is safe. Liquidation point is 80% LTV.
Then, SOL price drops again:
SOL/USD is $62.0
UserPosition (debt=100, collateral=2 SOL)
User LTV is: (100 / 124)*100 = >80% LTV
User is liquidated (loses 90% of collateral), because liquidation point is below the user's LTV. In this case, the user loses 90% of their collateral, receives 10% of their assets back, and their debt is fully paid by the USDH Vault.
After liquidation: User Position (debt=0, collateral=0 SOL)
If the user has kept their 100 USDH, they incur a net loss of ~10% (Collateral $124 - Debt $100 - $12.4 assets returned = $11.6 loss).
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