Liquidation

The liquidation mechanism module provides liquidation functionality. When a borrower's health factor falls below the liquidation threshold, liquidators can repay the borrower's debt in exchange for their collateral.

Core Concepts

Liquidation Principle

The liquidation mechanism is an important security mechanism in lending protocols:

1. Trigger Condition: When a borrower's health factor falls below the liquidation threshold
2. Liquidator: Anyone can become a liquidator
3. Liquidation Process: Liquidators repay debt and receive collateral
4. Liquidation Reward: Liquidators receive liquidation rewards as incentives

Liquidation Process

1. Monitoring: Monitor the borrower's health factor
2. Trigger: Trigger liquidation when health factor falls below threshold
3. Execution: Liquidators execute liquidation transactions
4. Settlement: Liquidators receive collateral and rewards

API Reference

liquidatePTB

This function liquidates a position by paying debt and receiving collateral. See documentation for details.

Usage Example

import { liquidatePTB } from '@naviprotocol/lending'
import { Transaction } from '@mysten/sui/transactions'

const tx = new Transaction()

const [collateralBalance, remainDebtBalance] = await liquidatePTB(
  tx,
  payAsset, // Asset identifier for the debt being repaid
  payCoinObject, // Coin object containing the debt repayment amount
  collateralAsset, // Asset identifier for the collateral being liquidated
  liquidateAddress, // Address of the borrower being liquidated
  options // Optional environment configuration
)