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Candidate discovery

Discover SmartAccounts from Registry/account events and indexed or RPC account readers. Read RiskEngine.liquidation_snapshot for current valuation and the unpriceable-plain-collateral flag. HF at or below 1.1 is a candidate condition, not guaranteed execution or profit.

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Prepare funding and authorization

For each recognized debt leg, resolve the underlying address and current lending-pool debt. Fund the liquidator with the exact test-token variant and enough allowance headroom for interest. Approve AccountManager as spender, using native token units and a suitable expiration ledger. The liquidation method calls token transfer_from from the liquidator directly to the pool. Approving SmartAccount or sending tokens to it is not the required liquidator funding path.

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Execute

Call AccountManager.liquidate(liquidator, smart_account) with liquidator authorization. There is no partial debt parameter or borrower-signature requirement. Manager pause, missing configuration, external liquidity, oracle failure, insufficient allowance, and transaction resource limits can all prevent success. The current implementation:
  1. Takes one eligibility snapshot and rejects healthy accounts or unpriceable plain collateral.
  2. Accrues each recognized pool, transfers debt payment from the liquidator, and clears corresponding debt shares.
  3. Batch-withdraws Blend collateral to the liquidator and hands AMM LP tokens to the liquidator without forcing a router exit.
  4. Sweeps all remaining direct collateral and emits Trader_Liquidate_Event.
Unrecognized debt symbols are reported and prevent the blanket debt-cleared flag. Inspect remaining shares/debt after execution. The SmartAccount is not deactivated by this function.

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Proceeds and limits

The liquidation configuration getter reports a 10% bonus value, but current execution does not compute a capped debt-plus-bonus payout or return surplus through sweep_to_split. Estimate proceeds using actual external exit value and LP liquidity. An LP token handed to the liquidator is not already converted underlying. Simulate the complete account shape and approval state. An indexed liquidation candidate, a quoted bonus, or a successful simple-account test does not establish that a multi-position transaction fits the network budget.

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Source reference

  • Protocol_V1_Soroban_testnet/contracts/AccountManagerContract/src/account_manager.rs
  • Protocol_V1_Soroban_testnet/contracts/RiskEngineContract/src/risk_engine.rs
  • mercury-stellar-backend/lib/margin-utils.ts