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    TERRA 126: Liquidation Risks

    On Anchor, one thing that you have to keep out for is your LTV (Loan-to-Value) ratio. LTV is basically your loan/collateral worth and it cannot exceed 60%. Once the LTV exceed 60%, your collateral ($bLUNA or $bETH) will be auctioned to other who want to pay for premium. Using Orca by Kujira, you can also participate in buying discounted $bLUNA. In this dashboard, we will take a look at some liquidation risks that can happen if you're a degen using Anchor Protocol.

    Picture below shows the historical $bLUNA/$LUNA price pegging. The price in candlesticks is much more accurate compared to line/bar graph that I queried so we will refer to the price from Coinhall.

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    We will analyze the largest liquidation events that occurs on September 7th where total of 35M liquidated which is more that the May crash. However it has much lower liquidation count compared to the May crash.

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    We can see that sudden drop of price causing the $bLUNA/$LUNA peg to messed up. For instance, price drop of 7% in few minutes messed with the peg of the pair.

    In conclusion, borrowers need to be aware of their LTV ratio and manage the risk accordingly. As all crypto project, many black swan event can affect the price instantly so do take that into account when borrowing.