Liquidation preferences
Liquidation is a protective process designed to safeguard investors in two scenarios:
- Default - where the Borrower fails to repay their loan
- Price liquidation - triggered if the Bitcoin price falls to a ‘Liquidation price’ level set for each deal. The threshold for price liquidation is set at 95% of the loan-to-value (LTV) ratio, calculated as the notional amount plus interest, compared to the actual value of the Bitcoin collateral.
There are two types of liquidation methods available for Investors:
- Self-liquidation - Investors receive Bitcoin collateral to their designated liquidation address, which they set during the deal setup process.
- Firefish liquidation - Firefish manages the collateral liquidation process on behalf of the Investors, and Investors receive their investment back in bank currency. Firefish receives the collateral only once the Investor is fully repaid. This mode allows Investors not to worry about handling cryptographic material, such as private keys or about interacting with exchanges.
Firefish liquidation is set as the default option. If you prefer self-liquidation for each deal instead, please navigate to ‘My Account / Settings’ and enable the ‘Self-liquidation’ option:
If ‘Self-liquidation’ is on, you will be prompted to provide your Bitcoin liquidation address when confirming your investment :
Alternatively, you can switch back to Firefish Liquidation when confirming the deal by triggering the ‘I want to self-liquidate’ button.
NOTE: It is not possible to change the liquidation method for live deals and deals that are in or past the Bitcoin collateral locking process stage.