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Introducing DeFi 2.0
Industry leading R&D
Token Distribution Event
Onchain Liquidation Engine
Here is how the onchain liquidation works in the Minterest protocol:
- An automated bot array runs protocol solvency checks, replacing the external liquidator function in identifying under-collateralized borrower positions. Each bot database mirrors the chain, with portfolio provisioning ensuring security and redundancy.
- Once an under-collateralized position is identified, the collateral required to be sold and the most efficient on-market liquidation strategy are both algorithmically determined. Sell pair calculations are finalized, the liquidation event is triggered, and the data is updated on the protocol.
- A designated smart contract further validates if the user is under-collateralized, the existing loan amount, and newly required collateral position such that the user’s Utilisation Ratio will be below the required 1.0 position, and then executes the required liquidation.
- The smart contract exchanges the liquidated collateral assets on-market to compensate the borrowed token pool and finally validates the user’s new position as being solvent again. If the smart contract determines any precondition or calculation to be invalid, the liquidation event is cancelled.
- Upon confirmation, the user's borrow position is again solvent and the liquidation event is determined to have been completed.
To learn more about the auto-liquidations, check out this awesome video by our CEO Josh Rogers.
Last modified 5mo ago
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