# Liquidation

## **Borrow limit**

Borrow Limit represents your percentage of the maximum amount you can borrow, based on the value you have deposited as collateral and the available liquidity. Borrow limit = borrow utilisation at 100%.

As liquidation will happen as user’s borrowed position exceeds the borrow limit (when borrow utilisation is > 100%),

### Borrow Utilisation

Borrow utilisation serves as a visual indication of the proportion of total deposited collateral against the total value of borrowed assets, in other words, how close is the position to being liquidated.

The lower the % of utilisation, the safer the user’s collateral is.

Borrow utilisation < 75%: <mark style="color:green;">Green</mark> (Relatively safe)

Borrow utilisation between 75% to 90%: <mark style="color:orange;">Orange</mark> (Please pay closer attention to positions)

Borrow utilisation between 90% to 95%: <mark style="color:red;">Red</mark> (Please improve borrow utilisation)

Borrow utilisation > 95%: <mark style="color:red;">**High risk of liquidation**</mark>

### **Improving Borrow Utilisation**

To improve Borrow Utilisation, the user can:

* Repay a portion or the full amount of the borrowed amount
* Add more collateral

## **Liquidations**

Liquidation happens when a borrower’s borrowed asset amount crosses the “borrow limit”, signifying collaterals are not fully covering the borrowed amount as per collateral factors. In a liquidation event, the liquidators will seize the available collateral from accounts that crosses the liquidation threshold and execute market transaction to help repay the borrower’s debt, taking a fee from the process.

{% hint style="info" %}
Liquidators are bots run by external third parties, helping to maintain the collateral health in Aurigami. Please refer to [Close Factor and Liquidation Incentive](/public/protocol/parameters.md) for more information on fees.
{% endhint %}


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