How do Liquidations work in Liquity?

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%.