validateLiquidationCall

Overview

Execution flow

• cache + updateState + get health factor

• _calculateDebt

• validateLiquidationCall

• getConfigurationData

• calculateAvailableCollateralToLiquidate

• setBorrowing

• setUsingAsCollateral

• _burnDebtTokens

• updateInterestRates

• updateIsolatedDebtIfIsolated

• liquidate/burn collateral

• liquidation fee

• Wrap-up

validateLiquidationCall

A valid liquidationCall must fulfil the following criteria:

• Status flags for both collateral and borrow asset must be ACTIVE and NOT PAUSED

• L2 check

• Ensure user's health factor < 1

• Collateral check

  • check that liquidation threshold is non-zero

  • confirm that user is using the collateral: isUsingAsCollateral

Since the liquidator can claim a single collateral of choice - we need to check the collateral address passed to ensure that it is indeed a valid selection. Else we might liquidate an asset that was not marked as collateral.

Liquidation threshold

• is the percentage at which a loan is defined as under-collateralized.

• usually no more than 10-15% above LTV.

For example, a liquidation threshold of 80% means that if the loan value rises above 80% of the collateral, the loan could be liquidated.

If the loan reaches the liquidation threshold, Aave prevents a user from borrowing and the user must either partially close their position or provide more collateral.