How do liquidations work?

If a Borrower misses their repayment, they have a five day grace period to make up the payment before their collateral can be liquidated by the Pool Delegate and repaid to the Liquidity Pool(s) which funded the loan.

If there is a collateral shortfall after the liquidation, the amount can be claimed from the Insurance Pool on Balancer, which is staked by Maple Token holders. This is accomplished by taking Balancer Pool Tokens which have been staked to the respective Liquidity Pool and redeeming these on Balancer for MPL Tokens and Stablecoin.

It is important to note that Borrowers enter a Master Loan Agreement during onboarding which enables legal enforcement.