# Liquidation System

ForTube is a lending protocol based on liquidity pool, which enables anyone to provide crypto assets to earn interest or borrow with collateral. Users can make earnings by simply depositing in the corresponding liquidity pool, while the borrower needs to deposit assets in advance as a collateral asset to obtain the corresponding amount of assets. This is similar to the collateral loan in traditional finance.

Liquidation refers to the process in which the system freezes the collatral assets and sells them at a discount in order to avoid bad debts , when the \[Health Index] is lower than the liquidation Threshold due to the price fluctuation of the \[Collateral assets] or \[Borrowed Assets].

The essence of liquidation is to sell part of the collateral below the market price to pay the principal and interest that the borrower should return to the fund pool, so that the fund pool can continue to operate healthily.

Health Index H: it is used to reflect the health of the user's debt. The higher the value, the lower the possibility of liquidation , and the higher the security status of the fund.

ForTube adopts a discount liquidation system, which means the liquidator can exchange the collateral at the discount price. The discount rate represents the liquidation reward for the liquidator.

Please note that ForTube adopts the principle of "Full Positions Guarantee", which means the borrower may deposit a variety of collateral assets, and the health index is calculated according to the user's all deposited assets and borrowed assets. This can ease the risk of a single asset plummeting, so that the change of health index becomes more gentle. In liquidation, it is possible to liquidate any kind of collateral assets.
