We model and analyze fixed spread liquidation in DeFi lending as implemented by popular pooled lending protocols such as AAVE, JustLend, and Compound. Empirically, we observe that over \(70\%\) of liquidations occur in the absence of any downward price jumps. Then, considering who monitors their loan with an exponentially distributed horizon, we compute the liquidation cost incurred in closed form as a function of the monitoring frequency. We compare this cost against liquidation data obtained from AAVE protocol V2, and observe a match with our model assuming the borrowers monitor their loans 3–4 times more often than they interact with the pool. Such borrowers must balance the financing cost against the likelihood of liquidation. We compute the optimal health factor in this situation assuming a financing rate for the collateral. Empirically, we observe that borrowers are far more conservative compared to our model predictions indicating a very low financing and opportunity cost.