Liquidation

In RainFi, there is no price-based liquidation mechanism. Unlike traditional lending platforms that trigger liquidation based on asset price volatility or LTV thresholds, RainFi only liquidates a position when a loan is not repaid by its due date.

This time-based liquidation model gives borrowers more control and reduces stress related to market fluctuations.

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When Does Liquidation Happen?

Liquidation only occurs when the borrower fails to repay the loan before or at the end of the loan period. If the loan remains unpaid past the deadline, the collateral (token or NFT) is automatically liquidated to repay the lender.

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Grace Period

RainFi offers a grace period to help users avoid immediate liquidation:

• 1 hour of grace is given for each day the loan is borrowed.

• The maximum grace period is 8 hours, regardless of loan length.

🕒 Example: If you borrow for 3 days, your grace period is 3 hours. If you borrow for 14 days, your grace period caps at 8 hours.

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How to Avoid Liquidation

To stay safe from liquidation, the borrower can choose from three available options:

1. Repay the Loan Repay the borrowed amount (and any accrued interest) before the due date to recover your collateral and close the position.

2. Extend the Loan Choose the Extend option to increase the loan duration. This creates a new loan under the current pool terms and gives you more time to repay.

3. Market Sell If you want to exit the position early or avoid repayment manually, use Market Sell. This sells the collateral (via DEX or marketplace) and automatically repays the loan with the proceeds. Any remaining value after repayment goes to you.

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Summary

RainFi offers a borrower-friendly approach by eliminating price-triggered liquidations. As long as you manage your repayment or use available actions in time, your collateral remains safe.