# Borrowing Your collateral is always at risk when you use your LP tokens as security to obtain a loan or to start a leverage yield farming position; under some circumstances, it might even be liquidated. Leveraged yield farming increases the danger of impermanent loss. A leveraged investment may be liquidated as a result of an impermanent loss. A liquidation is always an option with borrowed money or leveraged bets in the Terrace. Lif3 provides you with an estimation of the range of the liquidation price before you take out a loan. When the relative price for the token pair moves outside of this range, a leveraged position becomes liquidatable since higher leverage indicates a smaller range. In this case, your collateral might be sold to pay off the loan and an additional incentive for selling it for cash. Since liquidation prices are not set in stone, they could alter as the cost of your borrowing does. Prices are determined using the token pair's time-weighted average price (TWAP) from the Lif3 Price Oracle. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.lif3.com/terrace/risks/borrowing.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.