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.
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Please read the auction for liquidation details.
The definition for Health Factor: (Floor Price * Liquidation Threshold) / Debt with Interests.
The risk level of the health factor:
Liquidation will be triggered if the NFT loan's health factor is below 1.
