# Liquidation Process

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**TLDR:** if the collateral ($HEX) price drops sharply there may be outstanding debt. In that scenario, the depositor must acquire additional $HEX1 tokens to repay the original loan. 
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## Liquidation process

Liquidations take two different forms: price-based and time-based.

**Price-base liquidations**

1. If the collateral ratio (health ratio) drops below 250%, the position becomes available for liquidations.
2. Anyone can pay the borrowed HEX1 and claim the position. **This means the liquidator becomes the effective owner** of the tshares and can claim the underlying HEX tokens once the stake matures.
3. Liquidations follow a Dutch auction system where the total repaid HEX1 follows the drop in the price of HEX. The minimum the bidder can pay for the positon is 100%. 
4. To mint HEX at the end of the staking period, the total HEX1 borrowed amount needs to be repaid.

**Time-base liquidations**

1. Once the stake matures the borrower needs to repay the HEX1 loan and mint the underlying HEX tokens.
2. Hex One protocol checks the maturity date and grace period (bonus 7 days after endStake).
3. After the grace period is due, any participant can repay borrowed $HEX1 and claim the stake.
4. The liquidation winner gets to automatically mint the HEX stake.