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# Example

## Case 1: User in a healthy position

Following the post on Delta and the liquidation logic, we think a full example of liquidation calculations is useful. Suppose that the initial conditions of the position taken by the user are:
Ratio Finance Risk Tolerance
Market Conditions
Borrower's position
$\Delta_{min}$
= 2%
Market Price = $1.02 LP Tokens = 1000 Tolerance = 1.25 Fair Price =$0.98
Debt Taken = 100%
Collateralization Ratio = 130%
$\Gamma$
= 0.2%
Following the calculations before we have the following conditions for liquidation
Borrower's Position
Risk monitoring
Maximum Borrowable USDr = $784.62 Delta = 4.66% USDr Debt =$784.62
Dynamic CR = 128.15%
Collateral to Debt = 130%
$\Gamma$
= 0.2%
Health = 1.85%
Liquidate Flag = FALSE
In this case nothing needs to be done, the user is in a healthy position and there isn't any liquidation.

## Case 2: User repays to be safe

Here we start from the same initial conditions as the example above, however different market conditions pushed LP Market price to $1.01 and Fair Price to$0.85.
Ratio Finance Risk Tolerance
Market Conditions
Borrower's position
$\Delta_{min}$
= 2%
Market Price = $1.01 LP Tokens = 1000 Tolerance = 1.15 Fair Price =$0.85
Debt Taken = 100%
Collateralization Ratio = 130%
$\Gamma$
= 0.2%
The current market conditions are such that:
Borrower's Position
Risk monitoring
Maximum Borrowable USDr = $776.92 Delta = -1.15% USDr Debt =$ 784.62
Dynamic CR = 131.15%
Collateral to Debt = 128.73%
$\Gamma$
= 0.2%
Health = -2.42%
Liquidate Flag = TRUE
Then the amount to repay to be safe can be easily calculated:
Repay (%)
LP Tokens to deposit
USDr to repay
CR - CTD = 1.27%
Repay (%) * 1000 = 12.75
12.75 * $1.01 =$ 12.87
At the end of this repayment process the borrower goes back to a healthier position where:
New CTD
New Health
131.23 %
0.08%

## Case 3: User getting partially liquidated

Here the same conditions as the example above are given, but the borrower didn't repay any of their debt within the 3 epochs of time given as a buffer before liquidation occurs.
Ratio Finance Risk Tolerance
Market Conditions
Borrower's position
$\Delta_{min}$
= 2%
Market Price = $1.01 LP Tokens = 1000 Tolerance = 1.15 Fair Price =$0.85
Debt Taken = 100%
Collateralization Ratio = 130%
In this case the ratio between Market Price and Fair Price has dropped considerably and the position of the user needs to be liquidated
Borrower's Position
Risk monitoring
Maximum Borrowable USDr = $776.92 Delta = -1.15% USDr Debt =$ 784.62
Dynamic CR = 131.15%
Collateral to Debt = 128.73%
Health = -2.42%
Liquidate Flag = TRUE
In this example, at current market conditions the borrower's debt is now under-collateralized, therefore, the position needs to be readjusted. For this particular example this readjustment is:
Liquidation results
User perspective
Minimum Liquidation = 25%
New LP Position = 750
Tokens to be unwound = 250
New LP Nominal = $757.50 LP Notional Value =$ 252.66
New USDr Debt = $531.95 USDr Burnt =$ 194.35
New Collateral to Debt = 142.40%
New Health = 11.25%