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Documentation Index

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Liquidation is a key part of how Jupiter Lend maintains the safety and stability of the protocol. When a user’s borrowing position becomes too risky, meaning the value of their collateral falls relative to their debt, the protocol automatically sells just enough collateral to repay part or all of the loan and bring the position back to a healthy state.

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How Liquidation Works

Each position on Jupiter Lend is assigned a debt-to-collateral ratio, which measures the size of your debt compared to the value of your collateral. When this ratio exceeds a vault’s Liquidation Threshold (LT), the position becomes eligible for liquidation. Partial liquidations bring the ratio back to (or just below) the Liquidation Threshold — not back to the LTV. This means that after a liquidation, the position is no longer in the liquidatable zone, but it has not been restored to a “fully safe” state. If the collateral value continues to drop or the debt continues to grow, additional partial liquidations may occur. This is by design: the protocol only sells the minimum amount of collateral required to bring the ratio back to the LT. To make the process efficient, Jupiter Lend uses a tick-based approach. Positions with similar risk levels (similar ratios) are grouped into ticks. If market conditions change and one tick crosses its liquidation threshold, all positions within that tick are processed together in a single, optimized transaction. This allows liquidations to be handled faster, more efficiently, and with less market impact. Once liquidated, the remaining positions are automatically rebalanced into the next tick that matches their new ratio. If a position’s ratio exceeds the Liquidation Max Limit (LML), it exits the tick system entirely and is fully liquidated to zero.
Strategies and Multiply use the same liquidation mechanism. The difference is in the safety margin: standard Borrow positions can be opened with a buffer between the LTV and the LT, while Strategies open positions at maximum leverage by design, leaving a smaller buffer between the current ratio and the Liquidation Threshold. The mechanics are identical, but Strategies are more sensitive to rate or asset changes.
Unlike systems where an entire position might be liquidated at once, Jupiter Lend only liquidates the minimum necessary amount to bring the position’s debt-to-collateral ratio back to the Liquidation Threshold. The position is no longer eligible for liquidation immediately after, but it sits at the threshold rather than being restored to a fully safe state. If the collateral value drops further, additional partial liquidations may occur to bring the ratio back to the LT each time.This partial liquidation model reduces the risk of large sell-offs and prevents cascading liquidations in the market sense (where one large liquidation crashes the asset price and triggers others). Each partial liquidation only sells what is needed, minimizing market impact even during high volatility.
When a position is liquidated, a penalty is applied only to the portion of the position that is actually liquidated, not to the entire collateral. This penalty rewards liquidators for helping maintain system stability.The penalty rate varies by vault. As a result, users experience smaller losses even in liquidation events.

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Debt-to-Collateral Ratio

On Jupiter Lend, position risk is assessed using the debt-to-collateral ratio: your debt divided by the value of your collateral. The maximum borrowing percentage is determined by the vault’s Loan-to-Value (LTV) ratio. The Liquidation Threshold (LT) is always higher than the LTV, creating a buffer between the maximum you can borrow and the point where liquidation begins. Position Health is the status that shows how close your position is to liquidation. It reflects your current debt-to-collateral ratio relative to the Liquidation Threshold. The closer you are to the threshold, the higher the risk.
You have 20 SOL worth $4,000, and the vault’s Liquidation Threshold is 80%.You borrow 1,000USDCagainst1,000 USDC against 4,000 of collateral. Your debt-to-collateral ratio is 25%. The position displays: 25% / 80%.If SOL falls to 100each,yourcollateralisnowworth100 each, your collateral is now worth 2,000 while your debt remains $1,000. Your ratio is now 50%. The position displays: 50% / 80%.If you then remove 500worthofSOLfromyourvault,yourremainingcollateralis500 worth of SOL from your vault, your remaining collateral is 1,500 with $1,000 debt. Your ratio is now 66.7%. The position displays: 66.7% / 80%.

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Simulate liquidation risk

For pegged vaults (used in Multiply and Strategies), you can simulate how borrow rate changes affect your position over time using the Liquidation Calculator. This is especially useful at higher leverage, where the safety margin is reduced.

Liquidation Calculator

Estimate how long it would take for a position to reach liquidation under different rate scenarios. Pegged vaults only.