A crypto loan is backed by collateral that you lock up. Liquidation is what happens when that collateral is no longer worth enough compared with what you borrowed.
Nobody checks your credit on a blockchain. The system protects itself by holding more value than it lends, so the debt stays covered even if the price falls.
Every system sets a minimum ratio between collateral and debt. On Liquid Loans, Powercity and INCD, the loan can be liquidated below 110 percent.
Usually a falling price of the collateral. You do not have to do anything wrong: the ratio drops as the price drops, and the loan can reach the minimum.
Liquidation is automatic and takes effect quickly. Watching the ratio before it gets close is how people avoid it.
Pulse Lifeline watches the ratio of your PulseChain loans and warns you before one gets close to the minimum. Open Pulse Lifeline
Pulse Lifeline is in testing.
Last reviewed: 2026-11-02
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This page gives general information and is not legal, financial or medical advice. [email protected]