There seems to be some fear mongering being spread about LiquidLoans and a liquidation cascade event on PulseChain This post is in no way an endorsement and I suggest people don’t use lending protocols esp if they don’t understand the risk, but some important information needs to be clarified Liquity forks are not like standard lending protocols, in standard lending protocols like AAVE when a vault gets liquidated the collateral is sold to pay the debt. This can cause cascading liquidation events as the protocol is market selling the collateral assets. This is common and has been seen on Ethereum many times now Liquity does not work the same When Liquity and its forks hit recovery mode, which happens when the Total Collateral Ratio (TCR) of the entire system falls below 150%, liquidation rules change to protect the protocol In recovery mode, vaults under 150% collateral ratio become eligible for liquidation, starting from the lowest collateralized vaults first. The protocol liquidates the weakest positions to restore system health These liquidations are handled internally Vault closures are first covered by the Stability Pool providers. Those in the Stability Pool are there specifically to acquire collateral during these events in exchange for their stablecoins If the Stability Pool is depleted or doesn’t have enough funds, the protocol again self manages this. The liquidated vault’s debt and collateral are redistributed proportionally to the remaining vaults in the system, increasing both their debt and collateral. This mechanism helps the system remain solvent and is fully autonomous In each case the protocol self manages liquidations. Liquity forks are not like other lending protocols and liquidations are handled internally within the system. The underlying collateral is not automatically market sold by the protocol itself It’s important to assure we spread correct information as fear mongering isn’t cool chads, you have to remember if you’re an account with influence there are many who look to you for information and scaring people isn’t a chad move