# Collateral Liquidation

GopLend employs a **own liquidation protocol** **to prevent liquidity leakage from the protocol.** Liquidations occur when borrowers **default on their loans**, and the protocol must **recoup its funds.**

Protocol utilizes both internal liquidations based on NFT bets and market-maker liquidations

**Here’s a breakdown:**

* [**Internal Liquidation**](#internal-liquidation-bids)**:** The protocol uses internal rates with discounts to the NFT. NFTs end up going to the user who placed the bids
* [**Market-maker liquidations:**](https://wp.cryptogopniks.xyz/new-collection/nft-collateralized-loans#market-maker) Liquidations to a special protocol, NFTs fall to the owner of the collection

## **Internal Liquidation, bids**

In the GopLend ecosystem, there is an opportunity to buy NFT at a discount with NFT bids. Discounts were created to attract users and at a critical time for the market to own more liquidity to close loan commitments.\
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Bids can be placed at a discount of up to **20%** off the NFT cost of the protocol.

At the same time, the liquidator is determined by different criteria:

1. Checking if the bid amount is sufficient for liquidation. (But size has no bearing on priority. Simply a sufficient amount is needed)
2. The size of the discount. (Affects priority. The smaller the discount - the higher the liquidation priority)
3. The time at which the bid was placed. (Affects priority last. If 2 people bid the required amount with the same discount, the NFT will go to the one who did it first)

This ensures a fair distribution and no bots