> For the complete documentation index, see [llms.txt](https://docs.voyage.finance/voyage/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.voyage.finance/voyage/whitepaper/voyage-buy/liquidation.md).

# Liquidation

### Current Implementations on Other Protocols

Most lending protocols rely on two key parameters to determine liquidation criteria:

* **LTV** (loan-to-value);
* **Liquidation** **threshold.**

Loans are considered “unhealthy” if a borrower’s total collateral adjusted by the liquidation threshold (a number < 1) falls below the borrower’s debt, including interest. This makes loan health almost entirely dependent on the LTV ratio.

### The Voyage Solution

In Voyage's case, loans are a fundamentally different product.

1. Loans have fixed terms with fixed interest rates that are not rebalanced mid-loan;
2. Loans are collateralized by less liquid **non-fungible assets (NFTs)**.

Therefore, it is critical for the protocol to incentivize regular repayments. Consequently, liquidation is triggered when the condition of $$TPD(\alpha) \geq 0$$ is met.

In effect, this implies that payments must be made in a timely manner, else both the previously paid instalments will be forfeited and the NFTs will be liquidated to repay the lenders.

### Liquidation Mechanism

In order to prevent large liquidations from causing the floor price to fall unnecessarily, the protocol applies a **liquidation discount** for the NFTs. If $$floorPrice \gt debt$$​, a **discount** of $$LB$$ is applied.