I've noticed that many people confuse crypto liquidation with a total loss of money.

That's not quite it. It really depends on the context in which it occurs.

If you trade with leverage and the market moves against you, that's when things get complicated.
The exchange will liquidate your position to recover what it lent you.
In this case, you usually lose your collateral completely.
But, if after the crypto liquidation there is still collateral remaining after covering the losses, you can recover that excess.
It's rare for this to happen, but it can happen.

Regarding staking or lending platforms, it's a bit different.
You put your crypto as collateral to borrow, and if the value of your collateral drops too much, a liquidation can be triggered.
Here, you generally recover part of what you put up as collateral, after deducting what covers your loan.

The most serious situation is when the platform itself goes bankrupt.
In this case, assets are liquidated to pay creditors.
You might recover something, but honestly, it depends entirely on what remains and how many people are claiming funds.

In DeFi, it's automatic.
Smart contracts liquidate your loan if your collateral falls below a certain threshold.
You lose the collateral, but whatever remains beyond the repayment of the loan and fees goes back to your wallet.

To avoid ending up in these situations, it's basic:
Monitor your collateral regularly.
Use stop-loss orders on leveraged trading.
And most importantly, diversify your funds instead of putting everything on a single platform or position.
Good risk management is really the key to avoiding a catastrophic crypto liquidation.