Liquidation fees apply only when an on-chain liquidation transaction is executed, not when a position merely becomes liquidatable.
How Liquidation Fees Work
When a liquidation is executed:
- A liquidator repays part or all of the borrower’s outstanding debt.
- In exchange, the liquidator receives collateral equal in value to the repaid debt.
- The liquidator also receives an additional portion of collateral as a liquidation bonus.
- After the liquidator’s repayment and bonus are satisfied, the protocol applies a liquidation penalty to the remaining collateral.
This penalty is taken directly from the borrower’s collateral as part of the same atomic transaction.
More details on interest-related protocol fees are covered on the Lending Fees page.
Liquidation Penalty
After the liquidator's repayment and bonus are satisfied, the protocol deducts a penalty from the borrower's remaining collateral.
Protocol Liquidation Penalty: 5% of remaining collateral
Where Liquidation Fees Go
All liquidation penalty fees collected by the protocol are routed to the Polyester Treasury.
The treasury is fully on-chain and publicly auditable.
Treasury address: 0xA1cE5bF0cE4A8D9f3C2E6E8F7B1d9F2A4C7E9D01
Anyone can track liquidation penalty fees and treasury inflows on Polyester Scan.