Liquidation
Last updated
Last updated
All liquidations are tracked live by the Intotheblock RIsk Dashboard. It is available on the following links, and users can check the liquidation history to see if they have been liquidated. There is no notification in the UI about liquidation, but sudden balance changes usually indicate potential liquidations.
Users interested can find an example transaction for a liquidation on this Lineascan link: https://lineascan.build/tx/0x86299c0a359f79dc817574019f1198ff2c459530e71a1b71a6228135d75fb154
Liquidation is determined by borrow collateral factors (used to determine initial borrowing capacity).
When an account’s borrow balance exceeds the limits set by collateral factors, it is eligible for liquidation. A liquidator (a bot, contract, or user) can call the absorb function, which relinquishes ownership of the accounts collateral, and returns the value of the collateral, minus a penalty (liquidation factor), to the user in the base asset. The liquidated user has no remaining debt, and typically, will have an excess (interest earning) balance of the base asset.
Each absorption is paid for by the protocol’s reserves of the base asset. In return, the protocol receives the collateral assets. If the remaining reserves are less than the target, liquidators are able to buy the collateral at a discount using the base asset, which increases the protocol’s base asset reserves.
Our liquidation process is permissionless, and everyone is eligible to set up a liquidator to decrease the amount of bad debt in the protocol.
