If you're an NFT holder looking for liquidity solutions, the safety of your investment is probably one of your top priorities. Nobody wants to lose their valuable assets due to market fluctuations or unexpected events. Luckily, Ubiloan has implemented a Liquidation Protection mechanism to ensure that both lenders and borrowers are protected during the loan repayment process.

The Liquidation Protection mechanism offers a 48-hour protection period for loan repayment. As long as the borrower repays within this period, their NFT-backed loan will not be liquidated. This means that NFT holders who have collateralized their NFTs can rest assured knowing that they still have a 48-hour window to repay the loan without the risk of losing their NFT.

The Ubiloan Auction mechanism also ensures that all bidders have an equal opportunity to own an NFT, regardless of their status or background. This approach guarantees a fair and transparent transaction process, eliminating any potential biases or conflicts of interest. The auction process is transparent, fair, and accessible to everyone, guaranteeing a level playing field for all bidders.

In the event that the health factor drops below 1 due to market fluctuations, an NFT auction will be triggered to mitigate the impact on NFT values. The auction will be open to all, but with a focus on ensuring the safety of NFT holders, a 48-hour auction window will be provided for loan repayment. This means that NFT holders will have the opportunity to repay their loans and retain ownership of their NFTs, protecting their investments.

When a user's debt amount reaches a certain minimum value based on the collateral value, i.e., a health factor of 1, the liquidation process is triggered. This minimum value is the liquidation threshold and is used as a baseline indicator for debt risk management, which can be adjusted moderately based on the overall debt situation of the funding pool. The value of the liquidation threshold needs to be balanced to avoid untimely liquidation and bad debts or frequent liquidation of collateral, resulting in additional losses for the debtor.

The liquidation process involves several components, including the liquidation bonus, threshold price, liquidation price, redeem fine, mid bid fine, and fine. These components are used to calculate the starting price during auctions, give the bidder an arbitrage space, determine the value of the collateral, and calculate the final penalty paid by the user to the bidder when redeeming the collateral.

In summary, Ubiloan's Liquidation Protection mechanism provides a safety net for NFT holders looking for liquidity solutions. With a 48-hour protection period for loan repayment and a fair and transparent auction mechanism, both lenders and borrowers can rest assured that their investments are protected. The liquidation process is also carefully managed to avoid untimely liquidation or frequent collateral liquidation, minimizing the risk of bad debts or additional losses for the debtor.

Join in and use these features today!

https://ubiloan.io/