# Auction liquidation

### Everyone could participate in the liquidation ecosystem. <a href="#everyone-could-participate-in-the-liquidation-ecosystem." id="everyone-could-participate-in-the-liquidation-ecosystem."></a>

Liquidations are open to anyone. If a borrower fails to repay their debt obligation, the collateral will be allowed to go into auction. The auction starting price will be equal to the sum of loan principal + interest.

Anyone can participate in auctions, including borrowers. Bidders must first deposit ETH to place bids, and each subsequent bid price must be higher than the last. When a user places a bid, the smart contract will refund the ETH deposit of the previous bidder.

### How long is the public bidding period? <a href="#how-long-is-the-public-bidding-period" id="how-long-is-the-public-bidding-period"></a>

The public bidding period is 24 hours, and each new bid will extend the auction time by one extra hour until the auction period expires.

### Can you give me an example? <a href="#can-you-give-me-an-example" id="can-you-give-me-an-example"></a>

Sure! A couple of them here:

User A deposits a BAYC and borrows 10 ETH.

If User A ’s Health Factor drops below 1, his loan will be eligible for liquidation.

In the liquidation process, any liquidator can participate in this auction of BAYC pool collateral. The starting bid is 10ETH+ interest.

After liquidation(Auction), 10ETH + 80% of interest(Interest=Final bid price - Principal) will be allocated to BAYC Lending Pool. The remaining will be sent to the Treasury, as the guaranteed asset of Blue Chip Pools.

For example, User B collateralizes a BAYC and borrows 20ETH with a loan duration of 30 days.

If User B fails to repay the 20ETH within these 30 days, the BAYC NFT will be liquidated and directly entered into an auction.


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