
In decentralized finance (DeFi), leveraging tokens like $MORE offers an opportunity for amplified gains, but it also introduces the real risk of liquidation. Liquidation occurs when a user’s borrowed position becomes undercollateralized — in other words, when the collateral value can no longer sustain the loan due to price fluctuations. For anyone actively using $MORE on lending, borrowing, or margin platforms, avoiding liquidation is essential for capital preservation and long-term success.
This comprehensive guide explores effective strategies, tools, and best practices to help you avoid liquidation while interacting with $MORE in DeFi ecosystems.
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Understanding Liquidation: The Core Risk
Before learning how to avoid liquidation, it's crucial to understand how and why it happens.
In lending platforms where $MORE is used as collateral (or borrowed), each position has:
Collateral Ratio (CR): The value of your collateral compared to the value of your debt.
Liquidation Threshold (LT): A specific collateral ratio below which your position will be liquidated.
Liquidation Penalty: A percentage of your collateral forfeited if your position is forcibly closed.
For example, if you're using $MORE as collateral with a 150% liquidation threshold, and the price of $MORE drops significantly, your position becomes undercollateralized. The protocol will automatically sell part or all of your collateral at a discount to repay the debt — this is liquidation.
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Strategies to Avoid Liquidation on $MORE
1. Use a Safer Collateral Ratio (Overcollateralize)
The number one rule is to avoid using the minimum required collateral ratio. For example, if the liquidation threshold is 150%, aim for a much higher collateralization — ideally between 250% and 300%.
Why this works:
It gives you more room to breathe if $MORE ’s price drops.
It buys you time to react (top up collateral, repay debt) before liquidation kicks in.
For example:
If you deposit $3,000 worth of $MORE and borrow $1,000 worth of stablecoins, your CR is 300%.
Even if $MORE drops by 30%, your new CR is ~210%, still far from the 150% threshold.
2. Monitor the Price of $MORE Constantly
The price volatility of $MORE , especially during periods of low liquidity or heavy speculation, can cause fast drawdowns. Using tools like:
Price alerts on CoinGecko, TradingView, or DexScreener
Liquidation bots on Telegram or Discord
Mobile DeFi dashboards like DeBank or Zerion
…can keep you updated when the price nears your risk levels. Timely notifications allow you to respond quickly by adjusting your position.
3. Avoid Borrowing Against $MORE During High Volatility
If $MORE is experiencing abnormal volatility — such as during major news events, exchange listings, or sharp speculative rallies — avoid using it as collateral or opening new positions.
Why?
Volatility increases the chances of price dropping quickly.
Network congestion may delay your reaction, especially on-chain platforms.
Instead, wait for market stabilization before engaging in leveraged activity with $MORE .
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4. Use Stablecoins or Less Volatile Assets as Collateral Instead
If possible, use stablecoins like USDC, DAI, or USDT as collateral instead of $MORE . This eliminates the risk of collateral value dropping due to market fluctuations.
Alternatively, if you must use $MORE :
Diversify the collateral base. For example, use a mix of $MORE and a stable asset to reduce overall volatility.
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5. Set Automated Stop-Losses or Debt Repayment Triggers
Some DeFi platforms (like Aave or MakerDAO) or third-party tools like DeFi Saver offer automation features that help protect positions. You can set conditions like:
If $MORE price drops to $0.05, repay 25% of debt.
If CR hits 180%, deposit more collateral automatically.
These tools reduce human error and ensure proactive measures are taken instantly — especially during market crashes when manual intervention might be too late.
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6. Avoid Using Maximum Borrow Limits
It’s tempting to maximize borrowing when using $MORE as collateral, especially in a bullish market. But this is risky. Always leave significant margin of safety between your borrowing amount and the protocol’s limit.
Example:
If the max borrowable amount is $1,000, consider borrowing only $600–$700.
This ensures that if $MORE corrects by 20–30%, you’re still above the safe threshold.
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7. Regularly Rebalance Your Position
Markets evolve daily. Your position’s health should not be set-and-forget. Rebalancing helps you adapt to new price conditions by either:
Adding collateral when prices fall,
Repaying part of the loan to maintain a safe ratio, or
Taking profits from price rallies to reduce debt and build reserves.
Set a weekly or bi-weekly schedule to assess your $MORE -based positions and make necessary adjustments.
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8. Watch for Protocol-Specific Rules and Changes
Each platform that supports $MORE may have unique rules:
Varying liquidation penalties (5–20%)
Dynamic interest rates on borrowed assets
Protocol upgrades that alter liquidation logic
Stay updated on governance proposals or announcements in $MORE ’s Discord or Telegram. Ignorance of rule changes can result in unexpected liquidations.
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9. Utilize Insurance and Hedging Strategies
Some protocols offer DeFi insurance (like Nexus Mutual or InsurAce) which can cover losses due to smart contract failures or liquidation events.
Additionally, advanced traders may hedge their $MORE exposure by:
Opening short positions on a DEX or centralized exchange.
Using options to protect downside risk.
Though complex, these strategies can reduce net loss in adverse price conditions.
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Final Thoughts
The promise of high returns from leveraging $MORE must be balanced against the risk of liquidation, which can wipe out entire portfolios. By maintaining a healthy collateral ratio, monitoring markets, using automation tools, and practicing disciplined borrowing, you can significantly reduce your chances of liquidation.
Remember, DeFi doesn’t forgive mistakes easily — but it rewards careful, well-informed participants. If you treat each $MORE -based loan or collateralized position like a fragile contract that can break anytime, you’ll approach risk with the respect it demands — and preserve your capital over the long haul.
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