The Bend Protocol utilizes a scored 'health factor' for loans. The formula is outlined below.
When the 'health factor' of an NFT loan is below 1, anyone can trigger a liquidation in terms of an NFT Auction. The liquidator is called Bidder on Bend. The bidder will pay back all of the debt and receive the collateralized NFT in return.
Please read the auction for liquidation details.
The definition for Health Factor: (Floor Price * Liquidation Threshold) / Debt with Interests.
The risk level of health factor:
Liquidation will be triggered if the NFT loan's health factor is below 1.
