> ## Documentation Index
> Fetch the complete documentation index at: https://rootsfi.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# Risk Management

Understanding the risks associated with using Roots is essential for safe participation. This section details liquidation mechanics, penalties, and how to protect your positions.

## 1. Liquidation Mechanics

### When Does Liquidation Occur?

A position becomes eligible for liquidation when its Collateral Ratio (CR) falls below the Minimum Collateral Ratio (MCR) defined for that specific collateral type (see Parameters Table in Getting Started).

<Warning title="Example Liquidation Trigger">
  * You deposit 200 worth of WBERA-HONEY LP (MCR 150%).
  * You borrow 100 MEAD (Initial CR = 200%).
  * If the value of your WBERA-HONEY LP drops below 150 (e.g., to 149), your CR falls below the 150% MCR.
  * Your position is now eligible for liquidation.
</Warning>

### How Liquidations Work

Liquidations are processed primarily through the Stability Pool:

<Steps>
  <Step title="Stability Pool Priority">
    MEAD deposited in the Stability Pool is used first to repay the liquidated debt.
    *Example:* Stability Pool depositors might burn 100 MEAD to cover your debt and receive your \~149 worth of WBERA-HONEY LP as compensation.
  </Step>

  <Step title="Trove Redistribution (Fallback)">
    If the Stability Pool is empty, the debt and collateral are redistributed proportionally among all other active borrowers (Troves). This is a secondary mechanism.
  </Step>
</Steps>

## 2. How to Minimize Risks

<AccordionGroup>
  <Accordion title="Maintain a Safety Buffer">
    Actively monitor your Collateral Ratio. It's highly recommended to maintain a healthy buffer above the MCR for your collateral type.

    * *Example:* If the MCR is 150%, aim to keep your CR at 180%, 200%, or higher to absorb price volatility.
  </Accordion>

  <Accordion title="Emergency Options">
    If your CR is approaching the MCR, you have several options:

    * **Add More Collateral:** Deposit additional supported assets into your Trove at any time via the deposit page.
    * **Repay MEAD Debt:** Repay some or all of your outstanding MEAD debt. Repayment has a 0% fee.
  </Accordion>
</AccordionGroup>

<Tip>
  Regularly check your position on the Roots dashboard and consider using monitoring tools to receive alerts if your CR drops significantly.
</Tip>