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  • Introduction
    • Quick Guide
    • GLIF Overview
    • Protocol Users
  • For Liquidity Providers
    • Benefits for token holders
    • GLIF Reward Mechanism - iFIL
    • Exit - Withdraw FIL
    • Asset Security
    • Risks
  • For Storage Providers
    • Benefits for Storage Providers
    • SP Liquidation Values
    • Borrowing Limits & DTL
    • Uses of Borrowed FIL
    • Liquidations
    • Borrowing Cost
    • Manage Miner Actors with Agents
    • Guarantor Model
  • Developer Resources
    • GLIF SDK
    • GLIF CLI
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  • TROUBLESHOOTING
    • FAQ
      • FAQ for Liquidity Providers
        • About GLIF
        • Deposit FIL
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        • Risk
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      • FAQ for Storage Providers
        • Borrow and Withdraw FIL
        • Key Financial Ratio
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    • TUTORIALS
      • For Token Holders
        • Wallets
          • How to find your corresponding 0x/f410 wallet address
          • How to obtain a Ledger wallet as the intermediary wallet
          • How to obtain a burner wallet as the intermediary wallet
          • How to obtain a FilSnap wallet as the intermediary wallet
          • How to connect your wallet to Filecoin Mainnet
          • How to transfer FIL from a 0x address to an f1 address
          • How to create a multisig wallet on GLIF
        • Using the Pool
          • Deposit FIL into GLIF to earn rewards
          • How to deposit Filecoin from a hardware wallet with GLIF
          • How to deposit FIL to GLIF using multisig wallet
          • Withdraw FIL from GLIF
          • How to withdraw FIL from GLIF using a multisig wallet
        • Transfer FIL to/from exchanges
          • Transfer FIL between exchange and GLIF
          • Binance
            • Transfer FIL from Binance to GLIF
            • Transfer FIL from GLIF to Binance
          • MEXC
            • Transfer FIL from MEXC to GLIF
            • Transfer FIL from GLIF to MEXC
      • For Storage Providers
        • GLIF Agent Website Tutorial Part I— Preparation Setup
        • GLIF Agent Website Tutorial Part II — Create your Agent
        • GLIF Agent Website Tutorial Part III — Add Your Miner
        • How to withdraw FIL from the agent to an exchange at GLIF
      • How to Claim $GLF Airdrop
    • Glossary
    • Contact Us
  • Governance
    • Governance
    • Delegation
    • Proposals (GIPs)
    • Voting Process
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  • Managing Debt-to-Liquidity Ratio to Prevent Liquidation
  • Liquidation Threshold: Debt-to-liquidation (DTL) > 85%
  • GLIF Administration - DTL > 75%
  • Healthy SP criteria
  1. For Storage Providers

Liquidations

SPs must keep track of their DTL ratio to avoid liquidations or restrictions

PreviousUses of Borrowed FILNextBorrowing Cost

Last updated 3 months ago

Managing Debt-to-Liquidity Ratio to Prevent Liquidation

Liquidation Threshold: Debt-to-liquidation (DTL) > 85%

measures the economic security of any SP in the GLIF system because it exposes the collateral status of SPs. A DTL < 100% means an SP is over-collateralized because a liquidation is expected to recover all interest and principal owed by the SP to the pool. In other words, a liquidation would recover >100% of assets owed to LPs.

SPs with a DTL ratio above 85% are in a critical risk zone for liquidation. Immediate corrective actions and proactive communication with the GLIF team are essential to avoid liquidation and minimize further losses.

In the event of a liquidation, all interest and principal is expected to be repaid to the pool on behalf of SPs. If there is excess FIL available after a liquidation, the GLIF treasury charges a 10% liquidation fee on top of the total interest + principal owed to the pool. Any excess FIL after LPs and the GLIF treasury are both repaid is returned to the SP.

Managing Storage Provider liquidations is currently manually enforced by the core GLIF team for the safety of Storage Providers. Algorithmic liquidations are coming soon, once a few new Filecoin Improvement Proposals [1] [2] are passed and built into the core Filecoin protocol.

GLIF Administration - DTL > 75%

In addition to disabled borrowing and withdrawing from GLIF, SPs with a DTL ratio above 75% are eligible to be put on "administration", which allows GLIF to pay down the SP's debt using any available balances on the SP's miners. No terminations or penalties occur if a GLIF administrator pays down an SP's debt. The goal of the administrator is to recover the SP into good standing with GLIF (DTL < 75%).

Healthy SP criteria

  1. Debt-to-Liquidation (DTL) < 75%

  2. Faulty sectors <12% of all active sectors

If an SP's DTL ratio goes above 75%, it is not immediately in danger of liquidation. However, the SP is eligible for administration. If an SP's DTL goes above 85%, it is in danger of liquidation. It is highly recommended to contact the GLIF team immediately if any SP's DTL ratio exceeds 75%.

DTL