> For the complete documentation index, see [llms.txt](https://docs.butane.dev/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.butane.dev/use-butane/liquidate-and-redeem.md).

# Liquidate and redeem

Repay debt from other people's CDPs and receive their collateral.

Liquidation and redemption both let you repay debt from someone else's CDP and receive its collateral. They have different triggers.

|                | Liquidation                                                | Redemption                                                                |
| -------------- | ---------------------------------------------------------- | ------------------------------------------------------------------------- |
| Available when | The CDP's health factor is below 1                         | The market borrow rate is above the CDP's rate cap                        |
| You pay        | The market synthetic                                       | The market synthetic                                                      |
| You receive    | Collateral, limited by the market's max liquidation return | Collateral worth the repayment, adjusted by the market's redemption share |

Both happen on **Positions**, on the **Liquidate & redeem** tab.

<figure><img src="https://2611713366-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FsKoaKdI1o97UnvYVMfiL%2Fuploads%2Fgit-blob-2ca8ace2abf07ae2a2ffd9c1e5dea1b4b042428e%2Fv2-positions.png?alt=media" alt="Butane Positions page on the Liquidate &#x26; redeem tab"><figcaption><p>The Liquidate &#x26; redeem tab on Positions.</p></figcaption></figure>

## Liquidate

Liquidation protects the protocol when a CDP no longer has enough borrowing capacity.

1. Select the **Liquidatable** filter to list CDPs with a health factor below 1. **At Risk** (below 1.5) and **Critical** (below 1.1) show CDPs that are getting close.
2. Select **Liquidate** on a CDP.
3. Enter the **Debt to repay**. Under **Collateral**, take **Proportional** amounts or switch to **Custom** to choose the mix.
4. Check **You pay** and **You receive**, then select **Liquidate**.
5. [Submit the transaction](/get-started.md#action-composability-engine).

**Liquidate all** repays as much of the debt as your balance covers. On desktop, you can also select several CDPs in the table layout and choose **Liquidate** below the table.

The amount paid includes the selected principal and its accrued interest. The collateral you receive is limited by the market's max liquidation return, and part of the liquidation profit goes to the Butane treasury. If a full liquidation leaves collateral beyond that limit, it is set aside for the owner to [claim](/use-butane/manage-positions.md#claim-leftover-collateral).

A partial liquidation must leave the CDP healthy. If it would not, choose a larger amount or liquidate the whole position.

## Redeem

Redemption is what lets borrowers cap the rate they pay. When the market borrow rate rises above a CDP's rate cap, the CDP becomes redeemable, even if it is healthy.

1. Find a CDP whose rate cap is below the market rate. Its **Redeem** button is enabled.
2. Select **Redeem**.
3. Enter the **Debt to redeem**. Under **Collateral**, leave the selection on **Auto** or switch to **Manual** to choose the mix.
4. Check **You pay** and **You receive**, then select **Redeem**.
5. [Submit the transaction](/get-started.md#action-composability-engine).

**Redeem all** redeems as much of the debt as your balance covers. On desktop, you can also select several CDPs in the table layout and choose **Redeem** below the table.

The amount paid includes the selected principal and its accrued interest. The market's redemption share determines the collateral value you receive.

A partial redemption leaves the remaining debt and collateral in the CDP. A full redemption closes it, and any collateral the redeemer does not take is set aside for the owner, who [claims it](/use-butane/manage-positions.md#claim-leftover-collateral) from **Portfolio**.

You can also redeem from [Swap](/use-butane/swap.md), which redeems against CDPs for you when that pays more than the treasury.

## Bad debt

Bad debt occurs when a CDP's debt is greater than its collateral value. Liquidating it would then cost more than it returns, so the treasury can absorb the position instead.