# Liquidations of risky assets & Collateral Cashback

The liquidations of risky assets happen when the liquidation threshold of those asset has been reached.

Then, the asset(s) are liquidated following FRAKT's process, which is detailed here: <https://docs.frakt.xyz/frakt/loans/liquidations>

A unique feature of the midas protocol is that after having recovered the debt taken on the collateral, applied the penalty fee (10%) and FRAKT handling fee (2.5%), the remainder of the value, in SOL, is returned to the user whose asset(s) were liquidated, which we call the <mark style="color:yellow;">Collateral Cashback</mark>.

This method of liquidation guarantees the **robustness** of the MDS protocol as well as **fairness** towards the user of the MDS platform, substantially decreasing the risk using midas.

The timing of this process can vary as it currently is partially manual. We're aiming for <24 hours.

A concrete example:

> User A has an asset worth 100 SOL.
>
> User A decides to maximize the LTV taken on the 100 SOL, thus receives the equivalent of 35 SOL in $MDS.
>
> The price of the asset drops to 70 SOL (a drop of 30%), thus reaching its liquidation ratio of 200% (see [Multi-collateral MDS & Supported collections](/midas/multi-collateral-mds-and-supported-collections.md) for detail).
>
> The asset then goes through our liquidation mechanism:
>
> * Step 1: FRAKT raffles the asset at 10% below the floor price (margin): 63 SOL
> * Step 2: 35 SOL is recovered to cover the debt with the MDS protocol (converted in MDS)
> * Step 3: 28 SOL remains and is split as follows:
>   * 28 SOL \* 10% (Penalty fee) = 2.8 SOL (converted to $HADES, sent to veinHades Insurance Pool)
>   * 28 SOL \* 2.5% (FRAKT handling fee) = 0.7 SOL (sent to FRAKT)
> * Step 4: After all those subtractions, the user is left with the <mark style="color:yellow;">**Collateral Cashback**</mark>**,** the 24.5 SOL. This is sent back to the user who was just liquidated on this asset.&#x20;


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