🌊Liquidations

Liquidations are an essential part of the platform's risk management system. They occur when a position's collateral falls below the required maintenance margin. This document outlines the process of checking for and executing liquidations.

Checking Liquidatable Positions

To determine if a position is liquidatable, you can call the checkIsLiquidatable function in the Execution library:

solidity

function checkIsLiquidatableExternal(
        address _tradeStorage,
        address _market,
        bytes32 _marketId,
        bytes32 _positionKey,
        uint256 _indexPrice,
        uint256 _indexBaseUnit
    ) external view returns (bool isLiquidatable);

This function calculates whether a position's remaining collateral (after accounting for PnL, borrowing fees, and funding fees) is less than the required maintenance collateral.

Parameters:

• address _tradeStorage: The address of the trade storage smart contract.

• address _market: The address of the market smart contract

• bytes32 _marketId: The ID of the market where the position exists.

• bytes32 _positionKey: The key of the open position.

• uint256 _indexPrice: The current index price to 30 decimal places. E.g $2500 = 2.5e33.

• uint256 _indexBaseUnit: The base units of the index asset. Usually just 18.

Returns:

• bool isLiquidatable: True if the position can be liquidated, false otherwise.

Executing a Liquidation

Executing a liquidation is a two-step process:

Step 1: Request Execution Pricing

Before liquidating a position, you must first call the requestExecutionPricing function on the Router smart contract:

solidity

function requestExecutionPricing(  
    MarketId \_id,  
    bytes32 \_key,  
    bool \_isPositionKey  
) external payable returns (bytes32 priceRequestKey);

Parameters:

• MarketId _id: The ID of the market where the position exists.

• bytes32 _key: The position key of the position to be liquidated.

• bool _isPositionKey: Should be set to true for liquidations.

Returns:

• bytes32 priceRequestKey: A unique key for the price update request.

Note: This function is payable and requires a fee to cover the cost of the price update. Ensure you send enough ETH to cover the priceUpdateFee.

Step 2: Liquidate the Position

After requesting the execution pricing and waiting for a price to be signed, you can proceed to liquidate the position by calling the liquidatePosition function on the PositionManager contract:

solidity

function liquidatePosition(  
    MarketId _id,  
    bytes32 _positionKey,  
    bytes32 _requestKey  
) external payable;

Parameters:

• MarketId _id: The ID of the market where the position is being liquidated.

• bytes32 _positionKey: The position key of the position to be liquidated.

• bytes32 _requestKey: The price request key returned from the requestExecutionPricing function.

Important Notes:

Only the person who requested the pricing for an order should be able to initiate the liquidation, up until a certain time buffer.

After that time buffer, any user should be able to initiate the liquidation.

Tracking Open Positions

To efficiently monitor positions that may be approaching liquidation, you can use a subgraph to track open positions. This allows for real-time monitoring and quick identification of positions that may need to be liquidated. By following these steps and utilizing the provided functions, you can effectively manage and execute liquidations on the platform.