> For the complete documentation index, see [llms.txt](https://docs.solera.market/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.solera.market/protocol/risk-management/liquidations.md).

# Liquidations

For a detailed breakdown of liquidation concepts and formulae see the [Morpho Docs](<https://docs.morpho.org/overview/concepts/liquidation/ >)&#x20;

Liquidations in **Solera** occur when a borrower’s **Position Value** drops to a level which their collateral no longer sufficiently covers their outstanding loan. This can happen if the value of the collateral decreases or if the value of the borrowed debt rises relative to the collateral.

The **Health Factor** reflects this relationship by comparing the collateral’s **Max LTV** (Loan-to-Value ratio) to the loan, determining whether the borrower’s collateral remains adequate to cover their debt, or if the value has crossed the asset's **Liquidation LTV Threshold** .

Liquidations are triggered by real-time price data provided by **Oracle price feeds**. Once a liquidation is necessary, it is executed by **liquidator bots**, which can be run by anyone. A **Liquidation Penalty** is applied to the collateral during this process, incentivizing liquidators to act swiftly and helping maintain the protocol’s financial stability.

All liquidations on **Solera** are **open source** and **permissionless**, allowing anyone to participate as a liquidator. To learn more about running a liquidation bot, visit [Operating a Liquidator Bot](/developers/operating-a-liquidator-bot.md)


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