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Liquidation occurs when a leveraged position meets at least one of the following conditions:
Liquidators can close a liquidatable position by fully repaying the position’s debt and acquiring the remaining assets at a discounted rate, denominated in USDC units (based on the Oracle Price).

The position is underwater

Debt ratio is a parameter that will help users see how “healthy” or how close the position is to its liquidation point. Stella employs a concept of collateral and borrower credit to calculate debt ratios.
DebtRatio=TotalBorrowCreditTotalCollateralCredit\text{DebtRatio} = \frac{\text{TotalBorrowCredit}}{\text{TotalCollateralCredit}}
If a position in Stella Strategy has a Debt Ratio of over 100%, it means that the collateral value may not cover the debt (i.e. the borrowed amount) value, implying inability to repay debt. As a result, that position will become liquidatable.

The position expires

To ensure Stella’s ecosystem sustainability, lenders need to be rewarded for allowing their funds to be liquidity sources within a reasonable timeframe. As a result, every position on Stella Strategy will expire after 30 days since the time of opening.
After expiration, the position will become liquidatable regardless of the current debt ratio. Its yield will be realized and, if the yield is positive, will be distributed to lenders following the PAYE model.
Stella encourages leveragoors to monitor their leverage positions closely and always be aware of their current PnL and the time until position expiration to avoid any undesirable circumstances.