Hi! I just want to ask a few clarifying questions so I better understand the risks I’m taking.
Let’s say I have a portfolio with 5 ETH and 5000 USDC as collateral. Let’s say ETH is $5000 at T1 (Time 1) for the sake of these questions. I am able to borrow up to 80% of the value of my collateral before liquidation, so $28000. I borrow $20000.
It is now T2 and ETH has dropped to $4500. Now my collateral is worth $27500.
What gets liquidated at T2? $500 of my USDC, or $500 of my ETH? Or does more of my collateral than that get liquidated?