> ## Documentation Index
> Fetch the complete documentation index at: https://docs.theblockchainlibrary.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Liquidation

> The forced sale or seizure of collateral when a borrowing position no longer meets required collateralization.

# Liquidation

The forced sale or seizure of collateral when a borrowing position no longer meets required collateralization.

## Definition

The forced sale or seizure of collateral when a borrowing position no longer meets required collateralization.

## Why it matters

DeFi concepts explain blockchain-based markets, lending, trading, liquidity, and financial automation.

## Related knowledge

* [Smart Contract](/generated/v2/glossary/smart-contract) — term

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**Canonical knowledge ID:** `glossary:liquidation`