> For the complete documentation index, see [llms.txt](https://ifichi.gitbook.io/ifichi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://ifichi.gitbook.io/ifichi/what-is-ifichi/liquidation-mechanics.md).

# Liquidation Mechanics

#### Liquidation Process in IFICHI

The process of liquidating at-risk vaults is a critical operational element in the IFICHI protocol. When a borrower's collateral value dips below the required collateralization threshold, the protocol permits any  account to initiate a liquidation.

#### **Mechanism of Liquidation**

* **Structure**: IFICHI's liquidation mechanism is structured similarly to Compound's system, where no auction is involved.
* **Incentives**: For each type of collateral, there's a specified **liquidationIncentive**. This incentive plays a crucial role in calculating the rewards for liquidators. For example, with a 10% incentive on collateral valued at $5,000, a liquidator would receive $500 in collateral.
* **Who Can Liquidate**: Anyone familiar with the smart contract API can act as a liquidator. To facilitate this, we've developed a liquidation bot that can be deployed on cloud platforms like Google Cloud.

#### **Liquidator Bot**

* **GitHub Repository**: Users interested in automating the liquidation process can refer to our liquidation bot available on GitHub.

#### Pricing Data

* **Chainlink Dependency**: IFICHI relies on Chainlink Price Feeds for accurate and timely price data, leveraging Chainlink's status as a leading oracle network for contracts.