# Redemptions and Liquidations

**Liquidations: What You Need to Know**

Liquidations occur when a Trove's loan-to-value (LTV) ratio exceeds the maximum allowed by the Lyve Protocol. In such cases, the Trove is automatically closed. The outstanding debt is nullified and absorbed by the system, while the collateral is distributed among Stability Providers. The borrower retains all borrowed LYU and is not required to repay it.

**Who Can Initiate Liquidations?**\
Anyone can initiate the liquidation of a Trove that exceeds the maximum LTV. The initiator receives gas compensation (200 LYU) and an additional 0.5% of the Trove's collateral as a reward.

**Redemptions: An Overview**

Redemptions are a separate mechanism within the Lyve Protocol that allows LYU holders to redeem their tokens for a specified amount of collateral. Redemptions involve fees paid to both the protocol and the borrower.

**Is a Redemption the Same as Repaying My Debt?**\
No, redemptions are not the same as repaying your debt. To repay your debt, all you need to do is adjust your Trove's balances.

**How to Avoid Being Redeemed Against**\
To minimize the risk of having your Trove redeemed against, maintain a low LTV ratio relative to other Troves. The riskiest Troves (i.e., those with the lowest collateral) are prioritized during redemptions.


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