Liquidation Examples

A borrower has deposited a fungible LP token from an approved stable or weighted pool. Over time, pool composition and oracle inputs move enough that the account no longer has sufficient adjusted collateral value for its debt.

• • The liquidation node detects the shortfall and sources execution liquidity.
• • Debt is repaid and the LP token is redeemed into its underlying assets.
• • Claimable fees are realized if available and helpful to recovery.
• • Underlying assets are routed into the debt asset and the liquidation closes.
• • Any value left after repayment and reward is returned to the borrower.

A concentrated-liquidity position drifts toward the edge of its active range. The account may remain healthy for a while, then tip into liquidation once debt outpaces the recoverable value of the current position state.

• • The node values the position from its current range, liquidity, and token split.
• • Once liquidation begins, claimable fees are checked before principal is unwound.
• • Routing adapts to the actual inventory recovered rather than a static token mix.
• • Settlement follows the same pattern: repay execution liquidity, pay reward, return residual value.

A borrower deposits a Uniswap v3 NFT and later the position becomes underwater. The unwind is handled at the position level, not as a loose token slice, because the NFT represents one specific backing position.

• • Aave seizes the vault token balance tied to the NFT-backed position.
• • Avana burns the vault token and moves the real LP position into settlement.
• • The settlement module unwinds, sells, auctions, or transfers the position.
• • Debt is repaid first, the liquidator reward comes next, and any surplus follows the market rule.
• • The borrower does not keep a clean partial claim on the same NFT after liquidation.

A borrower may hold several LP positions inside one Borrow Spoke. Capacity is aggregated across those positions, but the unwind still has to happen at the position level once the account turns unhealthy.

• • The spoke reports one aggregate borrowing capacity to the Hub.
• • When the account becomes unhealthy, the liquidation node chooses the unwind path that best restores solvency.
• • One position may be enough to close the shortfall, or several may need to be partially or fully unwound.
• • Order of execution, oracle consistency, and route depth matter next to the mark itself.