Augmented Finance released an open-source Liquidation module, so everyone could earn rewards for liquidating undercollateralized loans.
During the recent market conditions, we decided to give another opportunity to earn rewards with Augmented Finance for our community. From now on anybody can liquidate a loan (borrow) position if the ‘Heath factor’ drops below ‘1’. Liquidators earn a 5–15% bonus for liquidated positions, depending on the asset.
The Liquidation module could be used for automatic search and liquidation of unhealthy loans and earn liquidation penalties in Augmented Finance protocol.
The Liquidation module’s functionality includes:
- Search for accounts with unhealthy loans
- Monitor details of unhealthy loans and calculate profits
- Execute liquidation of unhealthy loans
Learn how to liquidate undercollateralized positions on Augmented Finance in our GitHub.
What are liquidations?
The health of the Augmented Finance protocol depends on the ‘health’ of the loans within the system, also known as the ‘health factor’. Your ‘health factor’ can be found at the top of the Dashboard.
When the ‘health factor’ of an account’s total loans is below ‘1’, liquidators can make a liquidation to the LendingPool contract, paying back part of the debt owed and receiving discounted collateral in return (also known as the liquidation bonus). This incentivizes users to participate in the health of the overall protocol, by acting in their own interest (to receive the liquidation bonus) and as a result, ensuring loans are sufficiently collateralized.
You can check the Risk Parameters for each asset’s LTV and Liquidation bonus size.