What is the biggest nightmare in DeFi lending? Liquidation.

In the middle of the night, your phone pops up a price alert, and you sit up in bed in shock, frantically adding to your position — every leveraged trader has experienced this mental breakdown moment. Many people participate in liquidity mining, and when borrowing, they go by gut feeling: "Borrow 50% should be safe, right?" But then, a market reversal happens, and they get liquidated immediately.

I never play like that. I only trust one principle: **Margin of Safety**. Today, we’re not talking about how to make money; we’re talking about how to survive.

**Where is the death line?**

In mainstream DeFi lending protocols, different assets have different risk factors. Take BNB as an example, the minimum collateral ratio (MCR) is usually set at 110%, which means your LTV (Loan-to-Value) space is about 90.9%. This number looks safe, but it’s actually a theoretical limit.

When your collateral value drops to only 1.1 times the debt, the liquidation engine kicks in. But reality is more complex — on-chain confirmations are delayed, liquidations require Gas fees, and oracle prices can have deviations. These are unseen killers.

**Calculate your bottom line clearly**

Suppose your current BNB price is $600, and you have staked 10 BNB, with $6,000 worth of collateral in your account. Before opening a position, ask yourself this question: "If BNB drops to what price, will I be directly liquidated?"

That number is your death line. The more you understand it, the less likely you are to step over it.