> For the complete documentation index, see [llms.txt](https://kresko.gitbook.io/kresko-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://kresko.gitbook.io/kresko-docs/fundamentals/liquidations.md).

# Liquidations

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**This documentation is a work in progress!**
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## **Liquidations**

Anyone can liquidate a position under the [Liquidation Threshold](#liquidation-threshold) by repaying debt of a position, increasing its [Collateralization Ratio](/kresko-docs/fundamentals/cdps.md#collateralization-ratio). The repayment value, plus a liquidation incentive, is seized from the collateral deposits and sent to the liquidator. The liquidator decides which asset to repay and the collateral asset to seize in return.

It is the final backstop for protocol **solvency,** ensuring all [CDPs](/kresko-docs/fundamentals/cdps.md) are [overcollateralized](/kresko-docs/fundamentals/cdps.md#overcollateralization). A CDP with collateral ratio below the liquidation threshold is considered *underwater* and subject to liquidation. The protocol incentivizes anyone to perform these liquidations, as it does not do so itself.

Liquidation incentives are added into the seized value during a liquidation, this value is taken from any of the deposited collateral assets in the position.  

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Anyone can perform liquidations in the protocol. [Learn more](/kresko-docs/developers/liquidations.md)
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## ICDP & SCDP 

Both CDP models have their own liquidation process, the difference being that [ICDP liquidations](/kresko-docs/fundamentals/cdps/icdp/liquidations.md) are targeting the assets of an account while the [SCDP liquidation](/kresko-docs/fundamentals/cdps/scdp/liquidations.md) targets the pooled assets. 

### Maximum Liquidation Ratio

The maximum collateralization ratio (MLR) defineds the maximum collateralization ratio the position ends up in after a liquidation. This is equal or higher than the LT. It limits the seizable value to the minimum required to prevent unnecessary large liquidations.

### Maximum Liquidatable Value

The protocol limits liquidations by calculating a maximum liquidatable value (MLV) for a CDP. The value is derived from the [MLR](#maximum-liquidation-ratio), resulting in the liquidated CDP's [collateralization ratio](/kresko-docs/fundamentals/cdps.md#collateralization-ratio) being equal to the MLR after the liquidation.

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