In exchange for repayment, the liquidator seizes a fraction of the liquidatee's ALGO collateral at a discount. If the liquidator repays a full 50% of the 20 USDC Borrow, 10 USDC tokens, then the liquidator seizes $10 * (1 + Liquidation Incentive) = $10.75 worth of ALGO from the liquidatee. This amounts to $10.75 / $1.30 = 8.27 ALGO.