Liquidation Threshold
The collateral-to-debt level at which a lending protocol force-sells your collateral to repay the loan.
The liquidation threshold is the point at which a borrowing position becomes too risky to hold and the protocol sells collateral to cover the debt. If ETH has an 80% threshold, your position is liquidated once your debt reaches 80% of your collateral’s value — a 20% cushion for the protocol.
Liquidations usually charge a penalty (a bonus paid to the keeper bots that execute them), so being liquidated costs more than just the price move. Because thresholds are fixed but prices are not, the same loan is safe in calm markets and a landmine in volatile ones — which is why the gap between your ratio and the threshold is your real safety margin.