Liquidate

To liquidate an undercollateralized vault:

1. Have a balance of USDi in your wallet to repay the debt.
2. Find an eligible vault.
3. Call the function liquidateVault().

Interest Protocol's liquidation system is simple yet efficient. Vaults with debts greater than their borrowing power are eligible for liquidation. Liquidators can only liquidate a vault up to the point where the vault's debt equals the vault's borrowing power.

The protocol incentivizes liquidators by offering the collateral assets at a discount relative to the oracle price. The parameter liquidationIncentive represents the discount percentage for each asset.

A liquidator can call the function tokensToLiquidate(vault id, asset addres) to identify whether a vault can be liquidated; and if so, by how much.

Note: the number of tokens to liquidate is a moving number because prices are called on each function call, and interest is accrued constantly.

The function liquidateVault(vault ID, asset address, tokens_to_liquidate) liquidates a vault. The liquidator can liquidate any amount up to the maximum amount given by tokensToLiquidate(). If tokens_to_liquidate passed by the liquidator is greater than tokensToLiquidate(), the vault is liquidated up to tokensToLiquidate(). If a vault has multiple collateral assets, each asset must be liquidated in a separate call.

More information on the liquidation system is available here.

Information on using flash loans for liquidation is available here.