> For the complete documentation index, see [llms.txt](https://docs.creditcoop.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.creditcoop.xyz/user-documentation/v2/servicer-and-liquidation.md).

# Servicer & Liquidation

### The Servicer

The Servicer is a technical and operational role within the Credit Coop Protocol architecture. The Servicer role is modular and may be performed by one or more parties. CMBT Labs may act as Servicer in its capacity as a technical service provider.

The Servicer:

* Executes smart contract interactions in accordance with approved protocol parameters and smart contract logic
* Does not exercise independent discretion over credit decisions, lending terms, or fee structures — these are determined by smart contract logic and protocol governance
* Does not act as a lender, broker, financial intermediary, or investment adviser
* Acts solely as a technical and operational executor within the constraints of approved protocol parameters and contract code

In practice, the Servicer may assist with:

* Deployment and configuration of Credit Lines
* Partial or full repayment of Credit Lines using Reserves
* Withdrawal of unallocated Digital Assets to the relevant Wallet

All Servicer actions are executed on-chain and are publicly visible.

***

### Liquidation

Liquidation may be triggered where either of the following conditions is met:

* The Collateral Ratio of a Credit Line falls below the applicable minimum threshold; or
* A Credit Line is not fully repaid by its Due Date

Where either condition is met, the smart contract architecture authorises the Servicer to commence liquidation of Collateral and available Reserves.

**The liquidation process follows predefined protocol parameters:**

1. A grace period of 48 hours may be granted to the Borrower to remedy the situation before liquidation proceeds
2. If the grace period expires without remedy, the Servicer will liquidate Collateral and Reserves in a timely manner, prioritising decentralised exchange aggregators
3. Proceeds are distributed on a pro rata basis to Vault Depositors whose Digital Assets were allocated to the affected Credit Lines

The Servicer acts as a technical executor throughout this process. The Servicer does not exercise discretion over liquidation outcomes and does not mediate between parties.

Liquidation mechanics, grace period parameters, and applicable thresholds are defined by smart contract logic and are displayed on the Interface.

> **Important:** Even in fully collateralised situations, a Borrower may lose Digital Assets due to liquidation costs, collateral price movement during the liquidation period, or other factors. See the Terms of Use for full risk disclosures.


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