I also don't understand how there is risk of liquidation

Question

I also don't understand how there is risk of liquidation

when depositing a stable coin to borrow a risk asset (e.g. BNB). If BNB halves or doubles I would still have borrowed xBNB so would pay back xBNB....the price action shouldn't matter.....where am I going wrong here?

#blockchain #cryptocurrency #english #venus

0

23.08.2022

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Fikret Yılmaz | Venus 🇹🇷

Tony - NOT AN ADMIN
If you deposit let’s say stable coin 10k at the ma...

for bnb , colletteral ratio is 80. max borrow limit 8k. but it is liquidation limit.

0

23.08.2022

John Burnell My $0.02 Автор вопроса

Tony - NOT AN ADMIN
If you deposit let’s say stable coin 10k at the ma...

You mean if i deposit stable coins to borrow BNB and then sell that BNB?BNB rallies meaning i can no longer pay back the notional. Sure. I'm suggesting depositing stables and borrowing BNB then holding said BNB. In that scenario I cant see how it would be liquidated regardless if it x10 or goes down 90%, I still owe x amount of BnB

0

23.08.2022

Tony - NOT AN ADMIN · Accepted Answer

Tony - NOT AN ADMIN

If you deposit let’s say stable coin 10k at the maximum borrowed is 40%=4k. Then let’s say you borrow 2k worth of risk assets for the sake of argument BNB. Let’s say BNB price goes up by more than 100% hence it’s >4k. You get liquidated.

0

23.08.2022

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I also don't understand how there is risk of liquidation

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