Liquidation Flow
Operational sequence for how unhealthy LP-backed positions are unwound once liquidation is triggered.
Overview
This page expands the protocol's liquidation design into an operator-facing runtime sequence. It is intentionally narrower than the canonical liquidation spec: the goal is to explain how a liquidation is executed in practice without redefining protocol rules.
Avana treats LP liquidation as a controlled unwind problem. The node or keeper must repay debt, realize claimable fees, exit the LP position through the correct venue path, route proceeds into the debt asset, and preserve any residual borrower value.
Canonical Reference
The protocol source of truth for liquidation policy remains the main Liquidation Framework page. This support page assumes the same recoverable-value valuation model described in Price Oracles and the same position-level aggregation described in Collateral Factors.
Use this page for execution flow, not for new policy assumptions. Thresholds, bonuses, and admissibility rules should always be read from the canonical architecture and risk docs.
Runtime Sequence
Detect an unhealthy account
Liquidation nodes or external keepers watch the same risk-adjusted collateral values used by the protocol and flag accounts whose debt now exceeds allowed borrowing capacity.
Source execution liquidity
The liquidator acquires temporary liquidity, commonly through a flashloan-style path, so debt can be repaid without pre-funding the full position unwind.
Repay debt and take control of collateral
The relevant Borrow Spoke settles debt into the credit layer, takes custody of the liquidated position, and prepares it for venue-specific fee collection or unwind.
Claim fees and unwind the LP position
Any claimable fees are realized first when possible, then principal is unwound into underlying assets using the venue-specific removal path for that LP family.
Route proceeds and close the liquidation
Underlying assets are routed into the debt asset, execution liquidity is repaid, the liquidation premium is distributed, and any remaining value is returned to the borrower.
Collateral Handling
Different LP families share the same liquidation objective but not the same exit path. That is why Avana treats venue handling as an adapter problem rather than assuming a single unwind function for every pool type.
Fungible LP tokens
Standard ERC-20 LP positions are removed from the underlying pool and converted into their component assets before routing and settlement.
Concentrated liquidity positions
Range-based positions are decomposed according to their current inventory split. When a position is mostly one-sided, routing logic accounts for that before debt repayment is finalized.
Custom or hook-based pools
Pools with custom exit logic require a dedicated adapter or supported removal path before they can be considered safe for liquidation coverage.
Operator Notes
Liquidation bots should index active positions, refresh debt drift, and price accounts from the same oracle stack used by the protocol rather than from raw AMM spot state.
Profitability checks should account for slippage, route depth, flashloan costs, and execution risk. Large or unusual unwinds may benefit from private execution paths to reduce adverse MEV exposure.
For most builders, the safest pattern is to treat this page as a runtime checklist and keep the policy layer anchored to the canonical liquidation, oracle, and risk pages.