Step‑by‑Step Bidding Tutorial: How to Buy Liquidated Collateral
Participating in Liquidation Markets
The Liquidation Market allows you to acquire assets at a discount by providing the liquidity needed to keep the protocol solvent. Bids are pre-funded in $USTC and executed automatically when a borrower's Health Factor drops below 1.0.
Step-by-Step Bidding Guide
Step
Action
Why It Matters
On-Screen Cues
1. Access
Open Liquidation Markets in the "Advanced" menu.
View all active auction opportunities.
Dashboard with summary widgets and "My Bids."
2. Research
Filter by asset and compare Pool Discounts and Depth.
Helps you identify the most profitable or liquid pools.
Collateral tickers and Live Discount % data.
3. Select
Click Place Bid next to your chosen market.
Moves you to the specific bidding stats for that pair.
Detailed graphs showing recent fills and pool size.
4. Configure
Set your Discount % and Bid Size (in $USTC).
Defines your profit margin and locks your entry price.
Real-time price calculator and Fill Probability.
5. Stake
Click Place my bid and sign the transaction.
Escrows your funds in the smart contract for trustless execution.
Wallet pop-up; "Bid Placed" success message.
6. Monitor
Track your status in the My Bids section.
Allows you to re-price or cancel bids as market conditions shift.
Status chips: Pending, Partial, or Filled.
The "Bid Discount" Strategy
Liquidation bids are fulfilled from the lowest discount to the highest.
Low Discount (e.g., 5-8%): Your bid is at the front of the queue. You are more likely to get filled during small market dips, but your profit margin is lower.
High Discount (e.g., 15-20%): You are further back in the queue. You only get filled during major "flash crashes," but your profit per trade is much higher.
Pro Tips & Best Practices
[!IMPORTANT]
Pre-Funded Bids: Your $USTC is locked in the contract the moment you place a bid. You can cancel and withdraw your funds at any time, provided the bid has not yet been filled.
Diversify Tiers: Spread your $USTC across multiple discount tiers (e.g., some at 8%, some at 15%) to increase your chances of catching different levels of market volatility.
Watch Pool Utilization: If borrowing utilization spikes, liquidations often follow. Consider tightening (lowering) your discount to ensure you are at the front of the queue.
Factor in Slippage: Remember that you are buying the asset at a discount relative to the Oracle Price at the moment of liquidation. If the market continues to drop after you are filled, your effective gain may decrease.
Gas Reserves: Like all Juris actions, bidding, editing, or canceling requires a small amount of $LUNC for gas.
Last updated