Solvency Failure (Collateral Liquidation)

While IRIS Protocol isolates your collateral within a dedicated LoanPod and maintains fixed-rate protection during normal Solver-backed operation, you still bear the risk of the underlying lending venue (e.g., Aave, Compound) where your collateral is physically deposited.

If your collateral's value drops significantly relative to your debt, your Health Factor will decrease.

If your Health Factor drops below 1.0, the underlying venue will automatically liquidate a portion of your collateral to cover the debt, just as it would if you were borrowing directly from them.

IRIS Sync & Proportional Write-Down

IRIS Protocol imposes no internal liquidation logic based on collateral ratios. It purely mirrors the state of the underlying venue.

If you are partially liquidated by the venue, the IRIS Protocol detects this via a synchronization operation. Your LoanPod recalculates its state, and your fixed-rate obligation to the Solver is proportionally written down to match the remaining debt.

You do not face double-jeopardy; the protocol does not add a second layer of liquidation risk. You only face the standard liquidation mechanics of the venue hosting your collateral.