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

# Liquidation Event

<figure><img src="/files/D9NURiYaOCNdAdSdTR2Z" alt=""><figcaption></figcaption></figure>

Liquidation events are triggered by surpassing thresholds established by collateral factors (which determine initial borrowing capacity). Once an account's borrow balance surpasses these predetermined limits, it becomes eligible for liquidation.

A liquidator (such as a bot, contract, or individual) can initiate the absorb function, which transfers ownership of the account's collateral while returning the collateral's value, minus a liquidation penalty, to the user in the base asset. As a result, the liquidated user's debt is eliminated, and they typically maintain an excess balance of the base asset, which generates interest.

| Close Factor           | 50% |
| ---------------------- | --- |
| Liquidiation Incentive | 8%  |