# 🚨 Liquidations ## **Overview 🌐** #### Understanding Liquidations * Liquidations occur when Collateralized Debt Positions (CDPs) become undercollateralized. This process ensures the stability and solvency of the protocol. ## **Liquidation Process ⚙️** Two-Step Procedure: Liquidations in the Indigo Protocol are automated by bots but the actual two-step process is as follows. * **Freeze the CDP:** Once frozen, the CDP is inaccessible to its former owner, who forfeits all access and rights to it. * **Liquidate the CDP:** The CDP's debt is settled by burning iAssets from a Stability Pool, and its collateral is proportionally distributed to Stability Pool stakers. ## **Incentive to Liquidate 📈** * Stability Pool stakers are motivated to take part in Stability Pool to liquidate CDPs as they can earn a share of the CDP's collateral. Typically, the value of the earned collateral may exceed the value of the canceled debt, especially when a liquidated CDP has a collateral value above 100% of the iAsset value. ## **Fees 💸** * **Liquidation Processing Fee:** A 2% fee on liquidated iAssets, replacing the previous collateral fee, ensuring a consistent revenue stream during market downturns. * **Interest Fee:** Upon liquidation of a CDP, the interest owed is paid out of the collateral. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.indigoprotocol.io/readme/liquidations.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.