# Collateralization and Liquidation

iA Borrow is an over-collaterlized lending protocol. Each position collateral should be higher than the position's outstanding debt. A position Loan-to-Value (LTV) is defined as

$$
LTV\_{user} = \frac{Value(iAUSD\_{user})} {Value (iASOL\_{user})}
$$

If the LTV of a position reaches the  $${LiquidationLTV}$$ ( the maximum LTV that is allowed for each position), the posiiton is liquidated to maintain the system's integrtity

In addition, the system has a $$WarningLTV$$ (indicates that the user's position is close to the liquidation threshold).  In the *Warning* state, it's possible to add more collateral to a position or pay back part of the debt to restore it to *Safe* state

The current implementation uses the following parameters

* $${LiquidationLTV} = 66.6%$$7%. This corresponds to an over-collateratiaion ratio of 150%
* $${WarningLTV} = %$$62.5%. This corresponds to an over-collateratiaion ratio of 160%

The iA borrow application allows creating positions with up to 60% LTV to ensure the position doesn't go immediately to the warning state with price volatility