Method · snapshot 2026-11-14 21:23 UTC

Method

Clearance v2 · method of 14 Nov 2026 · by Dmitrii Luzin

How each number on this site is measured, how to repeat it, and what it does not measure.

Why exit cost against the bonus

A flash-loan liquidator repays a borrower's debt, receives the collateral and sells it in the same transaction. The trade only pays while the sale costs less than the liquidation bonus. Where the exit costs more than the bonus at a size, a single liquidation of that size loses money: the position has to be liquidated in smaller parts across blocks, and if prices fall faster than that, bad debt can build up. This follows the exit-capacity discussion in the Morpho forum RFC "Collateral Transparency".

Clearance, clearing size, quote-dependent debt

clearance(size) = bonus - exit cost(size) [percentage points]

Clearance: The liquidation bonus minus the exit cost at a size, in percentage points. Positive: room for a liquidator at that size. Negative: a single liquidation of that size loses money. It is an upper bound on the liquidator's margin: gas, competition and auction bids take part of it.
Clearing size: The largest measured size with positive clearance, every smaller measured size positive too. "Below $25k" means even the smallest measured sale costs the bonus or more. Measured sizes: $25k, $200k and $1M; between them nothing is measured.
Quote-dependent debt: Borrowed amount in markets that are liquidatable at some size only with RFQ quotes: with off-chain market-maker quotes the sale costs less than the bonus, through on-chain pools alone it costs the bonus or more, or has no route. Such a market stays liquidatable at that size only while the market makers keep quoting.

Example, snapshot 2026-11-14 21:23 UTC: USDe/USDC 91.5%, bonus 2.62%. $25k: exit 0.1%, clearance +2.6 pp; $200k: exit 0.1%, clearance +2.5 pp; $1M: exit 37.7%, clearance -35.1 pp. Clearing size: $200k.

Exit depth

Markets: Morpho Blue markets on Base that Morpho lists in its API, with at least $100k borrowed. Unlisted markets are left out: on Base they include spam markets with fake prices.
Bonus: Morpho Blue's liquidation incentive from the market's LLTV: min(15%, 1/(0.3·LLTV + 0.7) - 1).
Exit cost: For $25k, $200k and $1M: that much collateral (sized at the Morpho API USD price), quoted into the loan token through KyberSwap's public aggregator on Base (best route, every source including RFQ market makers and limit orders). Cost = 1 - (USD value out / USD value in), both sides valued by KyberSwap at the moment of the quote, floored at zero: the slippage and fees of the route. Where KyberSwap gives no USD values, the amount out at the Morpho API price against the size. Gas is not included (cents on Base). One quote per collateral/loan pair and size, shared by all markets of the pair. Costs above 50% are shown as >50%: there no liquidity and a wrong price quote look the same.
No RFQ: The same quote with KyberSwap's excludeRFQSources: off-chain signed quotes from RFQ market makers and limit orders are removed, on-chain pools stay - including pools whose price a market maker sets (prop AMMs, WOOFi, DODO private pools). Asked only when the best route uses RFQ; otherwise it is the same route. RFQ quotes are firm only for the moment they are given, and in a fast move a maker can widen or stop quoting; the no-RFQ cost is what the on-chain liquidity alone gives.
No route and not measured: No route: the aggregator answered that no source sells the token into the loan token at that size. Not measured: the quote failed in this snapshot or the token has no Morpho API price - shown as a dash, never as no route.
Venues: From the same route: the share of the collateral amount each source takes on the hops out of the collateral token. This is how the router splits this sale at this moment, not each venue's own capacity.
Near liquidation: Collateral, in USD, of the market's positions with health factor below 1.1 and below 1.25 (Morpho API); the second includes the first. In a pegged pair (two dollar tokens, a staking token against its asset) the health factor tracks the peg, not the market, so positions near liquidation there are normal.

Terms

LLTV - liquidation loan-to-value: The debt-to-collateral ratio at which a Morpho position can be liquidated. It fixes the bonus.
HF - health factor: Collateral value x LLTV / debt. Below 1 a position can be liquidated; HF < 1.1 is within 10% of that.
RFQ - request for quote: A firm price signed off chain by a market maker for one trade. It can be withdrawn in a fast market.
pp - percentage points: The unit of clearance: a 12.7% bonus minus a 15.1% exit cost is -2.4 pp.
Clearance: The liquidation bonus minus the exit cost at a size, in percentage points.
Clearing size: The largest measured size with positive clearance. "$1M+": positive at the largest measured size; larger sizes are not measured.
peg - pegged pair: Two tokens that track each other (two dollar tokens, a staking token and its asset): the health factor follows the peg, not the market price, so positions near liquidation are normal.
SVR - Smart Value Recapture: Chainlink's auction for the right to liquidate right after an oracle update; the winner pays back part of the bonus as a bid.
MM pool - market-maker pool: An on-chain pool whose price a market maker sets (prop AMMs, WOOFi, DODO private pools).
pmm-N - RFQ market maker N: An RFQ market maker that KyberSwap identifies only by number.

Liquidations

Morpho Blue liquidation events on Base, read from the chain, in Morpho-listed markets only (the same list as exit depth: anyone can create a market with its own oracle). Bonus = collateral seized minus debt repaid, in USD at the protocol's oracle price in the liquidation block; a liquidation whose collateral is worth more than 1.2 times the debt is left out (Morpho pays at most 15%, so the oracle there is broken or hostile). A liquidation counts as auctioned when its transaction went through the Chainlink SVR auction contract (Atlas); the bid is what the winner paid back from the bonus. Where an auction takes the liquidation, the margin left for the exit is the bonus minus the bid, smaller than the bonus.

What is not measured

Exits off chain (CEX, OTC) and sales spread over several blocks: the site measures one liquidation inside one transaction. Large positions are in practice liquidated in parts across blocks.
How depth behaves in a crash: every snapshot is an instant, one quote per size. Exit costs rise when prices move fast, exactly when liquidations are needed.
The market's oracle: exit cost is the route's own cost. A gap between the oracle and the market price, which a liquidator also bears in a fast move, is not included.
Redemption of the collateral with its issuer, where a token has one.
Pre-liquidations and other liquidation mechanisms built on top of Morpho Blue.

How to cite

In text: "Per Underkeel (Clearance v2, snapshot 2026-11-14 21:23 UTC), selling $1M of a token into USDC costs X% against a Y% liquidation bonus on Morpho, Base." Short: "(Underkeel, Clearance v2, 2026-11-14)". Always give the size and the bonus with a clearance figure: "clearance at $1M" alone does not say what it is measured against. Link to the market page, not to the home page: each market page has its own "Cite as" line.

Cite as: Underkeel, Clearance v2, Morpho Blue markets on Base, snapshot 2026-11-14T21:23Z, data sha256 81b87af3. https://underkeel.xyz/method.html

What the number is not. Clearance describes one liquidation of one size in one transaction. It is not a rating of a market, a vault or a curator, and it does not say whether any position will be liquidated.

Changelog

v1 - 13 Nov 2026: Sale sizes $25k, $200k and $1M. Exit cost from the KyberSwap Aggregator public API, with and without RFQ sources, against the Morpho API price. Bonus from the LLTV: min(15%, 1/(0.3 x LLTV + 0.7) - 1). Clearance = bonus - exit cost. Markets: listed by Morpho, at least $100k borrowed.
v2 - 14 Nov 2026: Exit cost = 1 - USD value out / USD value in, both valued by KyberSwap at the moment of the quote: the route's own cost. In a fast market on 14 Nov the Morpho API price lagged ETH by 1.7%, and measured against it a $25k WETH sale showed 1.7% instead of 0.1%. Quotes without RFQ are asked after every market has its best route.

A change of a size, a source, a threshold or a formula gets a new version and a line here. Past numbers are not recalculated; the history stays in git.

Updates and history

A new snapshot every 6 hours. A snapshot spoiled by a failing API (markets or quotes missing) is not published; the previous one stays. Every published snapshot is one commit in the site's public repository, so its history is the history of exit depth by market. Files and fields: Data. Raw data: data/exit-depth.json, data/liquidations.json.