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Borrowing Risk
When you use your LP tokens as collateral to require a loan or enter in a leverage position on Iron Finance, your collateral is always at stake and it may be liquidated when certain conditions are met. Before requiring a loan, the application will show an estimation of the liquidation prices.
When the market price crosses the liquidation prices, your collateral may be liquidated in order to repay your loan. Please notice that the liquidation prices are not fixed and may change as your loan size increases.
To put it simply: When borrowers borrow a lot, the utilization rate goes up. The interest rate will then increase to incentivize lending, while simultaneously disincentivizing borrowers from borrowing more.
Last modified 2mo ago
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