A vault with a value of $100,000 USD in MATIC borrows the max allowed collateralization ratio (150%) and receives 66,666.67 MiMatic (valued at $66,666.67 USD). If the value of MATIC in the vault drops to $95,000 USD and the remaining loan balance remains at 66,666.67 MiMatic, the vault is now undercollateralized (142% collateral to debt ratio). This triggers the ability for someone to partially liquidate the undercollateralized vault by paying down 50% of the vault’s debt. In this case, that would mean paying 33,333.33 miMatic. After doing so, the user liquidating the vault would then withdraw $33,333.33-worth of MATIC tokens, plus a 10% bonus ($3,333.33-worth of MATIC). The vault is then returned to the original owner.