# Step‑by‑Step Bidding Tutorial: How to Buy Liquidated Collateral

***

## Participating in Liquidation Markets

The Liquidation Market allows you to acquire assets at a discount by providing the liquidity needed to keep the protocol solvent. Bids are pre-funded in $USTC and executed automatically when a borrower's Health Factor drops below 1.0.

***

### Step-by-Step Bidding Guide

| **Step**     | **Action**                                            | **Why It Matters**                                                | **On-Screen Cues**                                  |
| ------------ | ----------------------------------------------------- | ----------------------------------------------------------------- | --------------------------------------------------- |
| 1. Access    | Open Liquidation Markets in the "Advanced" menu.      | View all active auction opportunities.                            | Dashboard with summary widgets and "My Bids."       |
| 2. Research  | Filter by asset and compare Pool Discounts and Depth. | Helps you identify the most profitable or liquid pools.           | Collateral tickers and Live Discount % data.        |
| 3. Select    | Click Place Bid next to your chosen market.           | Moves you to the specific bidding stats for that pair.            | Detailed graphs showing recent fills and pool size. |
| 4. Configure | Set your Discount % and Bid Size (in $USTC).          | Defines your profit margin and locks your entry price.            | Real-time price calculator and Fill Probability.    |
| 5. Stake     | Click Place my bid and sign the transaction.          | Escrows your funds in the smart contract for trustless execution. | Wallet pop-up; "Bid Placed" success message.        |
| 6. Monitor   | Track your status in the My Bids section.             | Allows you to re-price or cancel bids as market conditions shift. | Status chips: *Pending, Partial, or Filled.*        |

***

### The "Bid Discount" Strategy

Liquidation bids are fulfilled from the lowest discount to the highest.

* **Low Discount (e.g., 5-8%):** Your bid is at the front of the queue. You are more likely to get filled during small market dips, but your profit margin is lower.
* **High Discount (e.g., 15-20%):** You are further back in the queue. You only get filled during major "flash crashes," but your profit per trade is much higher.

***

### Pro Tips & Best Practices

> \[!IMPORTANT]
>
> Pre-Funded Bids: Your $USTC is locked in the contract the moment you place a bid. You can cancel and withdraw your funds at any time, provided the bid has not yet been filled.

* **Diversify Tiers:** Spread your $USTC across multiple discount tiers (e.g., some at 8%, some at 15%) to increase your chances of catching different levels of market volatility.
* **Watch Pool Utilization:** If borrowing utilization spikes, liquidations often follow. Consider tightening (lowering) your discount to ensure you are at the front of the queue.
* **Factor in Slippage:** Remember that you are buying the asset at a discount relative to the Oracle Price at the moment of liquidation. If the market continues to drop after you are filled, your effective gain may decrease.
* **Gas Reserves:** Like all Juris actions, bidding, editing, or canceling requires a small amount of $LUNC for gas.

***