Liquidations
Two distinct things in Unwind can become unhealthy, and each has its own liquidation mechanism.
An active leveraged position (tokenised asset collateral against base asset debt) whose health drops below the market’s threshold is liquidatable directly on the lending market, first come first served. This is the native path.
An unwind request mid-settlement (an escrow holding interim collateral while the tokenised asset redeems asynchronously) cannot be flash-sold, so the protocol runs a reverse-bonus auction instead: a Keyring-held role opens a round, the winner fronts the base asset, the protocol executes the liquidation itself, and the winner is paid a deferred claim once the request is finalised. This is the auction path.
For position holders
Health is visible on every position as the gap between current LTV and the liquidation LTV, with oracle prices refreshed at each interaction. Reducing leverage or adding equity widens the gap; the protocol buffer on unwind requests exists precisely to keep exits from starting too close to the threshold. See positions.
When an unwinding escrow is liquidated, nothing is forfeited by waiting: the Receipt NFT keeps its claim, and finalisation pays the holder and burns the NFT in the same call. What the holder receives is what remains of the settled proceeds after the debt is repaid, the Keyring fee is deducted, and the auction winner’s repay amount plus bonus is covered.