Liquidation
When a loan's collateral falls too far, anyone can repay part of the debt and take that amount of collateral plus a bonus.
Liquidation in more detail
If the health factor falls below 1, the loan can be liquidated.
At that point anyone can step in as a liquidator. They repay part of your debt and take that amount of your collateral, plus a bonus, as their reward. The bonus comes out of your collateral. On Aave, a loan whose health factor is 0.95 or lower can be liquidated in full.
It is automatic. Liquidators are bots that act within seconds. Nobody phones you first.
All 128 terms · Checked against the lesson's sources on 10 October 2026.
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