Polygon Aave Liquidation Risk
Aave liquidations happen on Polygon when your health factor drops below 1.0. Here's the exact mechanism, what you lose, and how to check your risk.
The Liquidation Trigger
When your health factor falls below 1.0, anyone can call the liquidation function on Aave. This is permissionless — you don't need to approve it, and you won't get a warning. The protocol is designed to always be solvent, so liquidations are automatic and mechanical.
The Liquidation Process
A liquidator repays up to 50% of your debt and receives an equivalent amount of your collateral at a discount (the liquidation bonus). On Aave v3 Polygon, this bonus is typically 5-10%. The liquidator profits from the discount; you lose the bonus value.
What You Lose
If your position is fully liquidated, you lose your collateral at a 5-10% discount. You also lose the position itself — any future upside from that collateral. Partial liquidations can happen multiple times until your HF is above 1.0 again.
Guardian Rescue vs Liquidation
Guardian Rescue lets you authorize a one-time rescue before liquidation occurs. Instead of a 5-10% penalty, you pay a 2.5% fee cap. You also choose which collateral to use and maintain control of the process.