Understanding Liquidation Prices

In Leveraged Volatility Farming (LVF), understanding how your liquidation price adjusts in real time is key to managing risk. Your position’s liquidation threshold is directly influenced by the price ratio between your paired asset (e.g., ETH, USDC) and your Pod asset (pTKN).

This is because your borrow debt is denominated in the paired asset. As that asset changes in value relative to pTKN, your liquidation price dynamically shifts:

• If the paired asset strengthens against pTKN, your liquidation price rises, increasing your risk of liquidation.

• If pTKN strengthens against the paired asset, your liquidation price falls, giving you more room to absorb volatility.

In other words, liquidation risk is driven not just by pTKN’s absolute price, but by its relative performance. Users should always consider the volatility and correlation between their chosen pair when estimating how resilient their position is to market movement.