# Minimal Liquidation

Users are required to ensure that the position's health factor remains equal to or greater than 1. If the health factor falls below 1, a liquidator has the authority to trigger the liquidation process and acquire the liquidation premium.

In the process of partial liquidation, liquidators have the flexibility to:

* Determine the specific borrowed tokens and the amount to be repaid to INIT.
* Select the collateral tokens to receive along with the liquidation premium.

INIT will calculate the amount of collateral token and the liquidation premium the liquidator receives.

***

To achieve minimal liquidation, INIT employs 2 features:

1. **Dynamic Liquidation Premium**

The liquidation premium linearly increases as the health factor decreases. 

As the position becomes riskier in health (health factor reduces), there will be more incentive for liquidators to liquidate before the position goes underwater. <br>

The premium of a position will depend on the following factors:

* Health Factor&#x20;
* Mode Liquidation Factor
  * Pegged modes (e.g. stable and LST) have lower liquidation factor.
* Token Liquidation Factor (Both collateral and borrow token)
  * Stable token has lowest factor, major token has medium factor, volatile token has highest factor.

**Premium Calculation Formula**

[`Premium = (1 / health factor - 1) * mode_factor * max(borrow token liquidation factor, collateral token liquidation factor)`](#user-content-fn-1)[^1]

2. **Liquidation Health Factor Threshold**

Liquidators can liquidate until the health factor increases up to a maximum depending on each mode.

This limit is in place to control the amount of borrowed tokens that the liquidator can repay, minimizing the premium amount the position’s owner has to forfeit to the liquidator.

[^1]:


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