Protect your borrow positions by opting into Auto Deleverage🛡️
Once enabled, it aims to keep a position open as much as possible by closing only a portion to restore its health, charging a fee only on the amount closed.
Learn how it works 👇
Take a scenario where a borrow position has Auto Deleverage enabled.
Instead of liquidating the entire 1 cbBTC, Auto Deleverage could close just 0.1 cbBTC, preserving 0.9 cbBTC collateral and avoiding liquidation.
A deleveraging fee is paid only on the 0.1 cbBTC.
The actual portion of the position closed depends on its health.
The closer the position LTV is to the default LLTV, the greater the % of the position that will be closed via Auto Deleverage.
For example, consider a market with 91.5% LLTV.
A position can be auto-deleveraged between an LTV of 90.00% and 91.49%, after which it's eligible for default liquidation.
The % of the position that can be closed increases from 0.10% (at 90.00% LTV) to 25% (at 91.49% LTV).
The % fee paid for Auto-Deleverage is the same as the default liquidation.
However, the fee is paid on a much smaller portion of the position instead of the entire position, reducing the total impact on the borrower.
Auto Deleverage happens before default liquidations.
If Auto Deleverage cannot execute properly, the borrower will be liquidated using Morpho's default liquidation mechanism.
Auto Deleverage is powered by Pre-Liquidations.
When borrowers opt in, they authorize a pre-liquidation contract to apply custom pre-liquidation settings that protect their positions.
Protect your positions, enable Auto Deleverage 👇
Now available on @ethereum & @base.
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