Liquidations
Information about Liquidations of Vaults on xBacked
The xBacked protocol allows users to stake xUSD into a pool used by the system for liquidating risky vaults.

When do liquidations happen?

As soon as a vault collateral ratio drops below 110% liquidion can begin. In this scenario, xUSD is used to repay the vault debt. The collateral is then transferred to the liquidator.
This happens until a vault collateral ratio is back to 120%

What fees are involved?

Liquidators receive discounted collateral. At the moment, this discount is 3.5% to the spot rate.
The protocol takes a 1% fee from the liquidated collateral. This leave the liquidator with a 2.5% discount to spot

Do Vaults get partially liquidated, or completely liquidated?

Partially liquidated. Vaults are only liquidated back to a healthy collateral ratio of 120%.

What is the incentive for me to stake my xUSD?