PredMart Liquidation — How It Works & How to Avoid It
How liquidation works on PredMart — full-collateral seizure when health factor drops below 1.0, the 5% liquidator fee, bad-debt handling, and how to manage your health factor to avoid liquidation.
<p>Liquidation triggers the moment a position's health factor drops below 1.0. PredMart uses a full-liquidation model — similar to perp futures on centralized exchanges — where 100% of the collateral is seized in a single transaction, sold on Polymarket, and used to repay debt. A 5% liquidator fee on the debt amount is paid out, and any USDC remaining stays with the lending pool. The borrower receives no residual. If the sale doesn't cover the debt, the shortfall becomes bad debt absorbed by lenders. Monitor your health factor — especially on leveraged positions where price drops are amplified.</p>