Liquidations
In bomb.money, every BUSM is backed by xBOMB. Unlike most protocols where all user's collateral is at risk of a liquidation event, here in busm.money, each Collateralized Debt Position (CDP) is isolated and only at risk of its own individual liquidation.
That being said, there are still times when a user's xBOMB value will decrease and be flagged for liquidation. In this event, 3rd party players (usually bots) can choose to repay all of the BUSM debt in exchange for the xBOMB collateral used.

An Example (with made-up numbers)

Bob the Builder has some xBOMB. The current price per token of this collateral is $3.2571. Bob is a risk taker and he decides to borrow the maximum allowance, 75%, of BUSM tokens. He is quoted a liquidation price of $2.44
Postman Pat has a cat set to watch this CDP and is ready to liquidate at a moment's notice.
As fate would have it, the price of xBOMB drops to $2.44, and Bob's collateral is no longer worth enough to cover his debt. So, Pat's cat can go to work on this CDP and liquidate it. Pat pays off the owed BUSM and takes those xBOMB tokens into his possession. However, Bob is not terribly disappointed, as he still has those BUSM tokens, well the ones he didn’t spend on magic ink, and he no longer has to pay off his debt.

The Liquidation Fee

xBOMB has a liquidation fee of 11%.
Liquidation Fee Sharing - This fee is the incentive given to the parties performing liquidations.
From a user perspective, this fee is already considered in the calculations when quoting a Liquidation price for xBOMB. When a users liquidation price is reached they are liquidated.

The Liquidation Price

The liquidation price is the price of your collateral at which you will be liquidated. If your collateral value decreases to a point where the liquidation price matches the price of the token that is used as collateral, your position will be flagged for liquidation. The contract will not allow liquidators to perform liquidation above the liquidation price, meaning that the user's collateral is safe up until the stated total liquidation price.

Special Features

There are a few important points of note regarding liquidations that should be highlighted very clearly. These points set busm.money apart and can determine whether users will be liquidated.

THEY ARE:

  • Busm.money uses xBOMB as the token is designed to increase in value over time, regardless of price action.
  • The price action of xBOMB can be quite volatile. To reduce this risk, we decided to limit the Maximum Collateral Ratio (MCR) to 75%.
  • Although any person can perform a liquidation, it has become standard that these functions are performed by bots. Because of this, there is no need for a UI on the main site for this function.
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Outline
An Example (with made-up numbers)
The Liquidation Fee
The Liquidation Price
Special Features