Liquidation Penalty

Introduction

The Liquidation Penalty defines the number of points taken away from the DeFi Credit Score if the Borrower is liquidated on their position. This penalty is currently set to the following values:

• Vault A: $-250$ points per liquidation per day.

• Vault B: $-300$​ points per liquidation per day.

• Vault C: $-350$ points per liquidation per day.

Score Impact

The Liquidation Penalty subtracts points for every day and every vault in which a liquidation occurs. The penalty only applies for 120 days, similar to the Daily Score Reward. After this period, the penalty is removed from the Borrower’s score.