Liquidations

Position Health

In the Revert Lend protocol, the health of a position is determined by comparing the value of the collateral (the Uniswap v3 LP position) to the outstanding debt associated with the loan. A position is considered healthy if the collateral value exceeds the debt, ensuring that the loan is adequately secured. However, if the debt grows due to accumulating interest or if the collateral value decreases, the position may become unhealthy. When a position’s debt exceeds its collateral value, it becomes eligible for liquidation to protect the protocol and ensure that the loan is repaid.

Who Can Liquidate?

Once a position is deemed unhealthy and enters liquidation mode, any account in the protocol can initiate the liquidation process. To do this, a user calls the liquidate function, repays the outstanding debt of the position, and, in return, receives a liquidation reward. This reward, known as the liquidation penalty, ranges from 2% to 10% of the debt value, depending on how close the debt is to the collateral value. This system incentivizes users to actively monitor the protocol and liquidate risky positions, helping maintain the stability and integrity of the lending pool.

Liquidator Bot Run by Revert

The Revert Lend protocol includes a dedicated liquidator bot operated by the Revert team. This bot is designed to automatically monitor the health of all positions within the protocol. When a position becomes unhealthy—meaning its debt exceeds the collateral value—the Revert liquidator bot swiftly initiates the liquidation process. By doing so, the bot repays the outstanding debt and claims the liquidation penalty, which ranges from 2% to 10%, depending on the position’s risk level.