Liquidation Manual

Liquidation Overview
The Teller protocol works with both secured (ie. collateralized) and unsecured (ie. non-collateralized) loans. When a loan is borrowed, the collateral ratio is calculated as the combination of a liquidation buffer plus a liquidation reward. The current values are set as 15% and 5% respectively. Additionally, each loan has a unique expiration date. This is determined by a user’s loan request.
Liquidation Scenarios
There are two scenarios when a loan can be liquidated:
1.Collateral value is less than [Total Owed * (1 + Reward %)]
2.Loan is overdue. The current date > loan expiration date
Total Owed: Value of the loan borrowed and the interest owed
Reward: Fee given to liquidator, initially set to 5%
Loan Types
Teller allows for several collateral types:
Over-collateralized. 
Collateral of 135% or above. Funds will be transferred from the lending pool directly to the borrower's wallet. 
If the value of the collateral deposited falls below the value of [Total Owed * (1 + Reward %)], the loan is available for liquidation. Likewise, if the current date is greater than the loan expiration date, the loan is available for liquidation.
Secured. 
Collateral between 20%-134.99%. Funds are transferred from the lending pool to an escrow contract specific to the loan. 
If the value of the collateral deposited plus the funds in escrow falls below the value of [Total Owed * (1 + Reward %)], the loan is available for liquidation. Likewise, if the current date is greater than the loan expiration date, the loan is available for liquidation.
Unsecured. 
No-collateral needed. Funds are transferred from the lending pool to an escrow contract specific to the loan. 
Liquidation can only occur if the loan is overdue. 
How to Become a Teller Liquidator
Head to the open-source solidity repository of the Teller V1 Protocol here.
1.check out the develop branch
2.run git pull
3.run yarn
4.make sure your .env file has the proper mnemonic you want to use
5.make sure your address for the mnemonic has funds to liquidate the loan
6.run truffle exec --network rinkeby ./scripts/loans/liquidate.js --tokenName {DAI} --collTokenName {ETH} --senderIndex 0
The liquidation script will automatically attempt to liquidate any available loans.

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Contents

Liquidation Overview

Liquidation Scenarios

Loan Types

How to Become a Teller Liquidator