Liquidation is the mechanism that keeps Fira solvent. Understanding when it happens — and how to stay away from it — is one of the most important things you can do as a borrower.
What triggers a liquidation
Every market on Fira has a Liquidation LTV (LLTV): the threshold at which your position becomes eligible for liquidation. The protocol compares your current LTV (debt divided by collateral value) against the LLTV at all times.
When your LTV hits the LLTV, third-party liquidators can step in immediately — no warning, no grace period. They repay part of your debt and receive a portion of your collateral plus a liquidation penalty.
The app shows your position's health relative to the LLTV. The closer you are to the threshold, the less buffer you have.
LLTV thresholds for all V1 markets
Market | Max LTV | LLTV | Liquidation Penalty |
PT-USDe / USDC (fixed, May 7) | 89% | 90% | 3.1% |
PT-sUSDe / USDC (fixed, May 7) | 89% | 90% | 3.1% |
PT-USDG / USDC (fixed, May 28) | 94% | 94.75% | 1% |
wstETH / USDC (variable) | 87% | 89% | 3.4% |
cbBTC / USDC (variable) | 88% | 90% | 3.1% |
UZR (bUSD0 / USD0) | 88% | — | — |
Max LTV is the highest ratio you can borrow at. LLTV is slightly above it — the gap between the two is your safety margin. Do not borrow at Max LTV.
What pushes your position toward liquidation
Three main factors can close that gap between your current LTV and the LLTV:
1. Collateral value drops
If the market price of your collateral falls, your LTV rises automatically. A 5% drop in collateral value at 85% LTV can push you past the threshold quickly.
2. Interest increases your debt (variable-rate)
In variable-rate markets, accruing interest means your debt balance grows over time. Even if collateral value holds steady, a high rate over a long period will gradually increase your LTV.
3. You borrowed too close to Max LTV
Starting with very little buffer means any adverse move — however small — can trigger liquidation. Borrowing conservatively from the outset is the single most effective protection.
What happens during a liquidation
A liquidator detects your position is eligible (current LTV ≥ LLTV).
They repay a portion of your outstanding debt.
In exchange, they seize an equivalent value of your collateral plus the liquidation penalty.
Your position is partially or fully closed, depending on the size of the liquidation.
This happens automatically on-chain. The protocol does not notify you. You may lose a significant portion of your collateral without any opportunity to intervene.
How to protect your position
Don't borrow at Max LTV. Leave a meaningful buffer — at minimum, 5-10 percentage points below the LLTV.
Monitor actively. Check your position regularly, especially during volatile market conditions.
Repay partially. If your LTV is rising, repaying a portion of the debt immediately reduces it.
Use the simulator. simulator.fira.money lets you model how price changes would affect your health factor before you act.
Liquidation isn't a bug — it's a protocol safety mechanism protecting lenders. The best prevention is simple: borrow conservatively and monitor your position.
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