# Liquidation Bot

Evoq has its own liquidation mechanism, mirroring Venus. As a result, it operates with dedicated liquidation bots.

## Overview

Liquidation can occur when a user's Borrow Limit used exceeds 100%.

> Due to the Close Factor, the amount that can be processed in one transaction is **up to** 50% of the user's Borrowed Amount.

> The liquidation penalty is 10%.

## Use Case

**The liquidation of the ecosystem**

Liquidation in Evoq plays a vital role in maintaining a healthy and secure financial ecosystem by:

* **Mitigating Default Risk**: It allows for the recovery of assets from accounts that fail to meet collateral requirements, reducing the risk of insolvency.
* **Ensuring Market Stability**: By efficiently handling bad debt, liquidation helps sustain long-term market integrity and resilience.
* **Encouraging Liquidator Participation**: The LI mechanism provides incentives for liquidators to actively engage in the process, ensuring continuous liquidity and market efficiency.

## Example

The Liquidation Contract below performs five key actions.

> The example contract is a capital-free liquidation using Aave flashloan. Therefore, you will pay a fee to Aave flashloan and receive a smaller amount of incentive than you expected. If you want to maximize your incentive, you should not use the contract below.

1. Borrow a borrower's loan asset using Aave Flashloan.
2. proceed to liquidate in Evoq Contract.
3. Swap the Reward (the borrower's deposit asset) received in step 2 for the flashloan asset via Pancake Swap V3.
4. repayment to Aave Flashloan.
5. Send the remaining Liquidate Reward to the liquidator.

## Liquidation Bot

[GitHub Repository](https://github.com/evoqfinance/Liquidation-Cookbook)

The provided GitHub repository contains a sample liquidation bot contract for Evoq on Venus.

## Key Features 

* Not a competitive bot but designed for large-scale collateral liquidation in a single transaction using flash loan.
* Requires only gas fees—no additional funds needed. 
* Can be used as-is or as a foundation for further improvements.

For questions, join our Discord.