Metronome
  • Metronome Synth
    • Introduction
    • Treasury Management
    • Protocol Owned Liquidity
      • External Liquidity
    • The Metronome Token ($MET)
    • Metronome Synth Protocol
      • Metronome Synth Features
      • Metronome Dashboard
      • Liquidations and Collateral Factors
      • Productive Collateral
      • Supported Assets
      • Synth Marketplace
      • DeFi Ecosystem
      • Metronome Synth Mintage and Deposit Caps
    • Risks
      • Liquidation
      • Black Swan
      • Oracle Disruptions
    • Metronome Revenue Model
    • Metronome Synth Glossary
    • Contracts
  • Smart Farming
    • Introduction
    • How Does it Work?
    • Competitive Advantages
    • Step-by-Step Guide
    • Loopage
    • Auto Repay
    • Risks
    • FAQ
  • Tokenomics
    • esMET
    • Governance
      • Lock MET
        • How to Lock MET
      • Early Unlock
        • How to Unlock MET
    • Trading Fee Discount
  • Contract Overview
    • Liquidation
    • Pool
    • Fees
    • Rewards
  • Metronome 2.0
    • Introduction
    • MET Tokenomics
    • Metronome DAO
      • Voting and Participation
      • Treasury Management
      • Metronome Improvement Proposal (MIP) Template
    • FAQ
    • Glossary
  • resources
    • Official Links
    • Brand Assets
    • Metronome 1.0
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  1. Metronome Synth
  2. Risks

Liquidation

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Last updated 10 months ago

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The primary risk to users on Metronome Synth is the risk of liquidation.

Liquidation is when a user’s position is partially or entirely closed, automatically based on rules programmed into the Metronome dApp.

Liquidation occurs when the value of a user’s collateral times the collateral factor of collateral asset(s) drops below the value of a user’s outstanding synthetic mintage.

Users can avoid liquidation by improving the health factor of their loan, which involves either depositing more collateral and/or redeeming some of the outstanding deposited collateral.

Health factors can be viewed at all times on the Metronome Synth dashboard for users to view and manage their risk. The health factor is determined by the amount of collateral vs. the value of a user’s synthetic assets.

Valuation of synthetic assets is determined via Chainlink’s oracle. Chainlink is the leading oracle provider in Web3. Chainlink oracle price updates happen at regular intervals. In addition, if an asset price deviates beyond a set threshold between oracle updates, the Chainlink oracle will update immediately to reflect the new price. See more about chainlink oracles .

Users are unable to mint synthetics when they are in excess of their collateral factor, but they retain privileges to deposit more collateral or redeem outstanding collateral positions in order to improve the health of their position.

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