# How do Liquidations work in Liquity V1?

To ensure that the entire stablecoin supply remains fully backed by collateral, Troves that fall under the minimum collateral ratio of `110%` will be closed (liquidated).

The debt of the Trove is canceled and absorbed by the Stability Pool and its collateral distributed among Stability Providers.

The owner of the Trove still keeps the full amount of LUSD borrowed but loses `~10%` value overall hence it is critical to always keep the ratio above `110%`, ideally above `150%`.

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## Related Articles:

* [Liquity V1](https://help.defisaver.com/protocols/liquity-v1)
* [Dashboard & Use-case](https://help.defisaver.com/protocols/liquity-v1/dashboard-and-use-case)
* [What is a Trove?](https://help.defisaver.com/protocols/liquity-v1/what-is-a-trove)
* [How to stay protected from redemption risk in Liquity V1?](https://help.defisaver.com/protocols/liquity-v1/how-to-stay-protected-from-redemption-risk-in-liquity-v1)
* [Liquity V1 Redemptions](https://help.defisaver.com/protocols/liquity-v1/liquity-v1-redemptions)