Liquidation Threshold, Liquidation

The liquidation threshold is the percentage at which the collateral value is counted towards the borrowing capacity. For example, a Liquidation threshold of 80% means that if the value rises above 80% of the collateral, the loan is undercollateralised and could be liquidated. The delta between the Loan-To-Value and the Liquidation Threshold is a safety cushion for borrowers.