# Liquidation

Liquidation occurs when the value of a borrower's loan exceeds a certain percentage of the initial value of the collateral. In this situation, the collateral is held by the smart contract and enters the liquidation process. Other people will then repay the debt, while the liquidator earns a certain premium. It's important to note that users cannot liquidate their own positions.

At W3BANK, the loan-to-value ratio cannot exceed 60% to avoid triggering the liquidation process.

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**Example:**

Suppose a user mortgaged 2000 US dollars worth of WPG and borrowed up to a maximum of 1200 US dollars worth of USDT. **If the price of WPG drops from 2000 US dollars to 1800 US dollars, the loan-to-value ratio of the borrowed USDT value to the collateral WPG value will be 66.67%, which exceeds the 60% limit. Therefore, the loan will enter the liquidation process.**

Other users can see the liquidation order in the liquidation column and click "liquidate" to perform the liquidation operation. By doing so, they can obtain the collateral assets and interest of the debt.

As shown in the figure, **the liquidation user repays 1888.903 USDT debt, obtains 663.909 WPG income, and the value is approximately 2061.88 USDT at market price, with a profit margin of about 9%.**

<figure><img src="https://4125020820-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FKfIARDZBcF0ZQ5IAvIRD%2Fuploads%2FahGJtq0Nm7FYqUAJVgY2%2Fimage.png?alt=media&#x26;token=90bd5c19-2a80-4b5f-be66-fce9e9648ea2" alt=""><figcaption></figcaption></figure>


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