TARE liquidations

API reference: AuctionHouse · TareEngine

ELI5: If your loan gets too risky, bots can pay off part of your debt and take your collateral — plus a small reward. If you're already underwater, a different path settles bad debt.

What you can do

Function	When
liquidate(collateral, user, debt_to_cover)	HF < 1, position still solvent
settle_bad_debt(user)	Collateral value < debt
retire_bad_debt(amount)	Refill surplus to pay down ledger

Flywheel fit

Liquidation bonuses and stability fees increase surplus → sTARE APY + Keep reinvestment. Does not route through Coil.

Contract walkthrough

Liquidate (tare_engine.vy):

1. assert HF(user) < MIN_HEALTH_FACTOR
2. Seize collateral worth debt_to_cover + 10% bonus
3. Burn debt_to_cover TARE from liquidator
4. Assert HF strictly improved

Settle bad debt:

1. Require insolvency (collateral USD < debt)
2. Move collateral to seized_collateral
3. Zero user debt
4. Burn min(debt, surplus) from buffer
5. Book remainder as total_bad_debt

flowchart TD
    A[HF drops below 1] --> B{Collateral covers debt+bonus?}
    B -->|yes| L[liquidate]
    B -->|no| S[settle_bad_debt]
    S --> AH[AuctionHouse optional]
    S --> BD[total_bad_debt ledger]

AuctionHouse — Dutch auction on seized collateral; proceeds to surplus.

Parameters

Param	Value
MIN_HEALTH_FACTOR	1e18
LIQUIDATION_BONUS	10%

What can go wrong

User risks

• No warning UI on-chain — monitor HF off-chain.
• Deep insolvency cannot use liquidate — must use bad-debt path.
• Surplus exhaustion → total_bad_debt rises (transparent on-chain).

See Liquidations (learn).

Source: TARE-Stablecoin/src/tare_engine.vy, auction_house.vy