Try Quests to earn cryptoFolks Finance Liquidation
Dig into liquidations on Folks Finance to help us better understand liquidations that have happened on the platform!
About Folks Finance
Folks Finance is a capital markets protocol for lending and borrowing built and operated on top of the Algorand blockchain. Through the lending operations, Folks users can deposit liquidity and start earning a continuous economic return instantly. Through the borrowing operation, users can request crypto loans by locking deposited funds as collateral. The name Folks Finance is inspired by the mission to open decentralized financial services to the masses, welcoming all sizes of wallets, opening the protocol to global accessibility. The protocol’s friendly and straightforward user interface allows non-crypto experts to benefit from the DeFi high yield, shaping a new era of financial services.
How Folks Finance is using Algorand
Folks Finance has chosen Algorand for building a decentralized money market protocol aiming to provide secure and profitable financial services to all types of users. The protocol takes advantage of fixed, low-cost, and high-speed Algorand transactions being one of the sector's most efficient and competitive protocols. By leveraging the AVM (Algorand Virtual Machine), Folks Finance creates a financial business model that can ensure the economic viability of the protocol, involving siloed money market liquidity pools, risk-adjusted credit, health factors, and a robust incentive system.
Liquidation, Incentives, and Health Factor
The liquidation mechanism occurs when collateral’s value falls below the under-collateralization threshold. In this context, liquidators have the opportunity to buy the collateral at a discounted price.
Folks Finance safeguards its markets by strongly incentivizing liquidation. Essentially, the collateral (f-tokens) is sold to the liquidator for its actual value minus a penalty, representing the liquidator’s income. This operation is crucial for DeFi Lending protocols since, if a position is not liquidated promptly, the protocol risks losing unpaid loans.
The degree of risk of a position is evaluated by the health factor: an index that measures its state of health based on the collateral-asset borrowed pair. The lower the health factor, the more the position is at risk of liquidation.
