I understand concept of liquidations, which is when the value of collateral drops below the borrowed asset value - this can happen either when :
collateral asset value drops
borrowed asset value suddenly goes up
what does not make sense intuitively is the 2nd case when a borrowed asset value goes up .
For example, if i take a loan of $100 BAT when BAT is $1 a coin, and if BAT goes up $2, isn't it a good thing since my BAT is now worth $200 and i can still can service the loan plus have extra profits to pocket? Why do i get liquidated when the borrowed asset value goes up (which causes ratio of supplied collateral to borrowed value to dip below 1)