Using aUST as collateral questions

I have a question about liquidation when using aUST as a collateral.

Since the value of aUST will stay the same when borrowing mAssets or short farming, I’m thinking you can’t get liquidated. But I have the feeling I’m wrong so can someone explain? Will you get liquited if the price of your mAsset will go up when minting or short farming? Bit of a noob here trying to understand it all. Thanks in advance!

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As I understand it, you are still at risk for liquidation.

Suppose you mint $100 of some mAsset and its minimum collateral ratio is 150%. You decide to provide 200% and let the protocol hold $200 of aUST. Here’s a scenario:

Price of some mAsset goes up by $10. Borrowed or short mAsset is now $110. You’re collateral ratio is now about 182%. Next trading day, it goes up another $10. Now you’re collateral ratio is about 167%. If this continues below 150% without adding to your collateral debt position (CDP), you will be subjected to liquidation.

I hope that was clear. Let me know if you have another other questions!

Cheers

Thank you! I’m just gonna try it with a small amount. Best wat to learn I think

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