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The liquidation planner uses account health and spoke parameters to size repayment and collateral seizure. Liquidators use get_liquidation_estimate for concrete amounts; this reference explains the calculations and their rounding constraints. USD values and health factors use WAD (1e18), indexes and scaled shares use RAY (1e27), and rates use BPS (10000). Token amounts use each asset’s native decimals. Formulas below describe ratios; fixed-point operations apply the rounding stated alongside them.

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Liquidation curve

There is no fixed close factor. The account’s health factor and its spoke’s curve determine the bonus and ideal repayment. Read live values with get_spoke(spoke_id).

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Bonus calculation

The collateral-weighted liquidation threshold controls how much bonus can be paid while preserving health:
The base bonus is the USD-weighted average of the collateral positions’ stamped liquidation_bonus, capped at the threshold-derived maximum. To calculate that maximum, round proportion_seized up to BPS and clamp it to [1, BPS]:
This bounds (1 + bonus) * proportion_seized at 1. A zero seizure proportion has a zero maximum. The bonus increases as health factor falls. With the bonus factor expressed as a ratio, the ramp is:
At or above the target, the ramp returns the base. At or below hf_for_max_bonus, the scale is 1. The result is subject to a final HF-preserving cap:
The cap applies when the seizure proportion is positive and HF is below 1. The planner selects the quote as follows: An ideal equal to the entire debt does not require the offered budgets to cover all debt. Smaller offers can succeed, subject to token rounding and the final plan checks.

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Repayment limit

The ideal repayment restores the target health factor at the selected bonus. It is bounded by both total debt and the collateral’s repayment capacity:
If the ideal would leave less than $5 of debt, the planner raises the ideal to a full close. This dust adjustment permits full repayment without making it mandatory by itself. Each offered leg is capped at its ceiling-rounded debt balance. For a partial plan, the planner trims excess from the last repayment leg backward. Insolvent plans floor kept native amounts so repayment stays within the collateral-backed quote. Other partial plans can exceed the ideal slightly through native-unit rounding. Each leg remains within its offered budget. The estimate reports unused budgets as refunds. A final full-close plan pulls the entire merged offer and the pool refunds excess. Other plans pull only accepted amounts. Authorize the complete offer when a full-close plan is possible; interest accrual and state changes can alter the plan before execution.

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Low-decimal collateral

Assets with 0, 1, or 2 decimals can be supplied but cannot be listed as borrowable. Their listing must use zero liquidation fees. A liquidation quantum is one base unit: 1 token at 0 decimals, 0.1 token at 1 decimal, or 0.01 token at 2 decimals. For a solvent partial quote with one low-decimal collateral leg, the planner can raise the ideal to fund one base unit. Partial seizure rounds down to base units. The planner releases repayment that the dropped fractions no longer back. If the plan repays all debt, partial collateral seizure rounds up, capped at the held claim. A plan with no accepted repayment fails with InvalidPayments. The two-base-unit collateral floor applies at post-risk validation gates. It means 2, 0.2, or 0.02 tokens at 0, 1, or 2 decimals. Normal liquidation does not enforce that floor.

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Seizure and fees

The planned gross seizure value includes the liquidation bonus:
Seizure is allocated across the account’s collateral by USD value and capped at each held balance. The protocol fee applies to the bonus remaining after those caps. A seizure capped below principal has no remaining bonus fee base. The Transfer fee cap prevents fees from consuming repayment principal. Token rounding can still remove a small liquidation’s profit. Rounding depends on token decimals, prices, indexes, and position size; simulate the complete transaction and enforce a net proceeds bound. If the debt transfer delivers less than planned, every seizure is reduced proportionally with floor rounding. LiquidationEvent.repaid_usd_wad reports the measured repayment, capped at each planned debt leg’s USD value. Estimates report gross seizure and fees separately. In Transfer mode their units are native collateral tokens; in Credit mode they are RAY-scaled supply shares. A full Transfer payout floors the held claim, while the estimate can round that claim half up. For example, a claim worth 1.6 base units can appear as 2 in the estimate and pay 1 before fees. Clamp estimated gross to the floor of the held claim before subtracting fees or valuing profit. For Credit proceeds, subtract fee shares from seized shares before converting the net shares once through the supply index. Credit position events report token-unit representations with different rounding, so gross-minus-net event amounts do not give exact fees. See liquidation reconciliation.

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Bad-debt accounting

Bad-debt cleanup realizes losses through the affected debt market’s supply index. The index reduction applies to all outstanding supply-share claims in that market, including unclaimed protocol revenue shares. After capping the loss at the market’s supplied value, the pool computes:
The two floors compound. Before the final clamp, the resulting index is no greater than the corresponding single-step value. The index is bounded below by SUPPLY_INDEX_FLOOR_RAW = RAY / 1_000 (0.001). Each debt loss affects its own market. An account with debt in several markets can cause a write-down in each of them. See cleanup eligibility and calls and interest and revenue for the surrounding accounting model.