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What Is the Term for a Margin Call in a DeFi Lending Protocol?

"Liquidation." The smart contract automatically allows an incentivator to seize collateral when the ratio is breached.
Greeks.Live22.11.25

What Is the Term for a Margin Call in a DeFi Lending Protocol?

The term for a margin call in a Decentralized Finance (DeFi) lending protocol is typically "liquidation." Since DeFi protocols are automated by smart contracts, there is no centralized entity to issue a "call." Instead, when a borrower's collateralization ratio falls below a pre-defined threshold, the smart contract automatically allows an incentivized "liquidator" to repay the loan and seize the collateral, often at a discount.

What Is the Significance of the “Liquidation Ratio” in DeFi Lending?
How Is Collateral Managed and Liquidated in a DeFi Smart Lending Contract?
How Do Smart Contracts Enforce Margin Requirements in Decentralized Finance (DeFi) Derivatives?
What Is the Significance of the Collateralization Ratio in a CDP?

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