Learn / Borrowing
Liquidation penalty
The extra slice of collateral a liquidator takes as a reward.
Video coming soon
In plain words
A liquidator repays some of your debt and takes the same value of your collateral plus a bonus, usually 5 to 10%. That bonus is your loss on top of the price drop that caused it.
Worked example
Aave liquidates half of a $15,000 loan with a 5% penalty: you lose about $375.
Try it in the health factor calculator →Examples use sample numbers. Estimates, not advice.