4. Loan Health Factor

The Bend Protocol utilizes a scored 'health factor' for loans. 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 BendDAO. The bidder will pay back all of the debt and receive the collateralized NFT in return. The borrower can redeem his NFT to end the auction by repaying some loan debts (50% in default). Please visit the auction page for liquidation details.

4.1. How to calculate the Health Factor

  • Health factor = (floor price * liquidation threshold) / debt with interest
  • Floor price: The floor price of NFT feed by Oracle.
  • Debt: Your outstanding loan
  • Liquidation threshold: After the adjustment of BIP#9, BIP#10 governance proposal, the liquidation threshold is now 80%.
Health Factor Alert List: The list displays the loans with HFs close to 1. If the Loan Health Factor is below 1, the loan will be displayed on the Available to Auction page.

4.2. My Health Factors

Go to the “Home-Dashboard-My NFTs” page to check the health factors of my collateralized NFTs.

4.3. Liquidation process

NFTs with a health factor less than 1 will appear on the Available to Auction page. This page shows NFTs for which an auction can be triggered by the bidder.
  • Total Floating Loss means the amount of floating loss of the protocol. That is, when the floor price falls below the debt, the protocol will have a floating loss.
  • Auctionable NFT Debt: The sum of the debt of the auctionable NFT.
  • Auctionable NFT Value: The sum of the value of the auctionable NFT.
When a bid is placed, the NFT to be auctioned will appear on the Loans in Auction page.
  • Auction Period: 24 hours, the auction will last for 24 hours from the first bid.
  • After 24 hours, if the NFT owner fails to repay the debt, the ownership of the NFT belongs to the highest bidder in the auction.

4.4. 24h liquidation protection

If the auction starts which means that someone triggers the auction by bidding, the borrower will have 24 hours to redeem the NFT. To redeem the NFT, the borrower can repay 50% of the debt and pay the fine to the first bidder.
  • Latest bid: the latest bid in the auction, and the highest bid
  • Bid fine: the fine that the borrower has to pay to redeem the NFT