# 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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