> For the complete documentation index, see [llms.txt](https://calnix.gitbook.io/aave-book/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://calnix.gitbook.io/aave-book/functions/liquidate/liquidate-burn-collateral.md).

# liquidate/burn collateral

## Overview

<figure><img src="/files/0ccGoRTL5H2XZUoohcTt" alt=""><figcaption></figcaption></figure>

### Execution flow

* [x] <mark style="color:orange;">cache + updateState + get health factor</mark>
* [x] \_calculateDebt
* [x] validateLiquidationCall
* [x] getConfigurationData
* [x] calculateAvailableCollateralToLiquidate
* [x] <mark style="color:orange;">setBorrowing</mark>
* [x] <mark style="color:orange;">setUsingAsCollateral</mark>
* [x] \_burnDebtTokens
* [x] <mark style="color:orange;">updateInterestRates</mark>
* [x] <mark style="color:orange;">updateIsolatedDebtIfIsolated</mark>
* [ ] liquidate/burn collateral
* [ ] liquidation fee
* [ ] Wrap-up

## liquidate/burn collateral

<img src="/files/sMacrF3a63Wsy0Rbg5hv" alt="" class="gitbook-drawing">

If liquidator has opted to receive aTokens in payment (**`params.receiveAToken == true`**)

* `_liquidateATokens` will be executed
* **Else**: \_burnCollatearlATokens will be executed

## `_liquidateATokens`&#x20;

Transfers aTokens from the target user to the liquidator.&#x20;

* Amount transferred: debtRepaid + liquidation penalty  (in collateral terms)
* If the liquidator did not have aTokens of this kind previously,
  * validateUseAsCollateral
  * setUsingAsCollateral

validateUseAsCollateral ensures that liquidator is not in isolation mode and the incoming asset is not an isolation mode asset.&#x20;

If these conditions are met, the reserve transferred to the liquidator is set to be used as collateral.&#x20;

<figure><img src="/files/UFEuedFLEqphorV10OAl" alt=""><figcaption></figcaption></figure>

`transferOnLiquidiation` calls `_transfer`, which executes the transfer of aTokens.

<figure><img src="/files/1I0bbWwjksyXUPK3JXQs" alt=""><figcaption></figcaption></figure>

* `validate` is set to **`false`**, therefore `finalizeTransfer` is not executed

For explanations on validateUseAsCollateral and setUsingAsCollateral, please see the supply section on the following segments:

* [validateUseAsCollateral](/aave-book/functions/supply/isfirstsupply.md#validateuseascollateral)
* &#x20;[setUsingAsCollateral](/aave-book/functions/supply/isfirstsupply.md#setusingascollateral)

{% hint style="info" %}
Where possible, Aave opts to set supplied assets as collateral automatically. The exception to this are isolated assets.&#x20;
{% endhint %}

## \_burnCollateralATokens

If the liquidator does not wish to receive ATokens, the alternative would be to transfer the underlying asset to them (instead of aDAI, transfer DAI).

<figure><img src="/files/2MASXPHHNss1caV7GyZw" alt=""><figcaption></figcaption></figure>

To enact a transfer of the underlying asset, its corresponding aTokens must be "redeemed". Effectively, this means that liquidity is being removed from the system. This would therefore impact interest rates, and they have to be updated.&#x20;

**Hence, `updateInterestRates` is executed with parameters:**

* liquidityAdded = 0
* liquidityRemoved = actualCollateralToLiquidate

Lastly, **`burn`** is executed.&#x20;

<figure><img src="/files/4ZfcZ0xOyOYaq4FtJGCB" alt=""><figcaption></figcaption></figure>

* **`_burnScaled`**: burn scaledAmount and update user balances
* safeTransfer underlying asset from target user to liquidator

{% hint style="warning" %}
TO-DO:

* does updateState need to be run again here?
* nothing material would have changed between its inital execution to this point
* confirm this.
  {% endhint %}


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