Understanding Hard-Liquidation (LLAMMA)

[mo-anon]

Recently, I've noticed increasing confusion about the hard-liquidation mechanism of LLAMMA. Users seem surprised when they experience hard-liquidation even though, as they say: "collateral price did not reach the bottom of the liquidation range."

Many users do not realize that hard-liquidation depends solely on health and is not really related to their liquidation range. We are currently working to make the section on resources easier to understand. However, it might be a good idea to add a tooltip directly in the UI on the markets with a disclaimer such as, "The liquidation range does not reflect a hard-liquidation price. A loan's health decreases due to losses while being in soft-liquidation and can be hard-liquidated when the health is at 0 or lower. For more information, see here: Resources."