1. Summary

The LiquidationEngine enables external actors to liquidate SAFEs and send their collateral to the CollateralAuctionHouse as well as send a portion of their debt to the AccountingEngine.

2. Contract Variables & Functions

Variables

• contractEnabled - must be 1 for the LiquidationEngine to liquidateSAFE s. Used to indicate whether the contract is enabled.

• authorizedAccounts[usr: address] - addresses allowed to call modifyParameters() and disableContract()

• safeEngine - address that conforms to a SAFEEngineLike interface. It cannot be changed after the contract is instantiated.

• accountingEngine - address that conforms to an AccountingEngineLike interface.

• chosenSAFESaviour[collateralType: bytes32, safe: address] - stores the SAFESaviour chosen by a safe user in order to save their position from liquidation.

• safeSaviours[saviour: address] - stores contract addresses that can be used as SAFESaviours.

  • A SAFESaviour can be "attached" to a safe by its owner. When an external actor calls liquidateSAFE, the SAFESaviour will try to add more collateral in the targeted safe and thus (potentially) save it from liquidation.

• mutex[collatralType: bytes32, safe: address] - helps with preventing re-entrancy when liquidateSAFE calls a SAFESaviour in order to add more collateral to a position.

• collateralTypes - stores CollateralType structs

• onAuctionSystemCoinLimit - total amount of system coins that can be requested across all collateral auctions at any time

• currentOnAuctionSystemCoins - amount of system coins requested across all current collateral auctions

Data Structures

• CollateralType:

  • collateralAuctionHouse - the address of the contract that auctions a specific collateral type.

  • liquidationPenalty - penalty applied to a SAFE when it is liquidated (extra amount of debt that must be covered by an auction).

  • liquidationQuantity - maximum amount of system coins to be requested in one collateral auction.

Modifiers

• isAuthorized - checks whether an address is part of authorizedAddresses (and thus can call authed functions).

Functions

• disableContract() - disable the liquidation engine.

• connectSAFESaviour(saviour: address) - governance controlled address that whitelists a SAFESaviour.

• disconnectSAFESaviour(saviour: address) - governance controlled address that blacklists a SAFESaviour.

• addAuthorization(usr: address) - add an address to authorizedAddresses.

• removeAuthorization(usr: address) - remove an address from authorizedAddresses.

• modifyParameters(parameter: bytes32, data: address) - modify an address variable.

• modifyParameters(collateralType: bytes32, parameter: bytes32, data: uint256) - modify a collateral specific uint256 parameter.

• modifyParameters(collateralType: bytes32, parameter: bytes32, data: address) - modify a collateral specific address parameter.

• liquidateSAFE(collateralType: bytes32, safe: address) - will revert if lockedCollateral or generatedDebt are larger than or equal to 2^255.

• protectSAFE(collateralType: bytes32, address, address) will revert if the proposed SAFESaviour address was not whitelisted by governance

• removeCoinsFromAuction(rad: uint256) - signal that an amount of system coins has been covered by a collateral auction and it can now be subtracted from currentOnAuctionSystemCoins

• getLimitAdjustedDebtToCover(collateralType: bytes32, safe: address) - returns the amount of debt that can currently be covered by a collateral auction for a specific safe

Events

• AddAuthorization - emitted when a new address becomes authorized. Contains:

  • account - the new authorized account

• RemoveAuthorization - emitted when an address is de-authorized. Contains:

  • account - the address that was de-authorized

• ConnectSAFESaviour - emitted when a new SAFE savior becomes available to protect SAFEs from liquidation. Contains:

  • saviour - the savior's address

• DisconnectSAFESaviour - emitted when a SAFE savior is not available anymore to protect SAFEs. Contains:

  • saviour - the savior's address

• UpdateCurrentOnAuctionSystemCoins - emitted when currentOnAuctionSystemCoins is updated. Contains:

  • currentOnAuctionSystemCoins - the current amount of system coins being requested across all active collateral auctions

• ModifyParameters - emitted when a parameter is updated by an authorized account

• DisableContract - emitted after the contract is disabled

• Liquidate- emitted when a liquidateSAFE(bytes32, address) is successfully executed. Contains:

  • collateralType- collateral

  • safe- SAFE address

  • collateralAmount- see collateralToSell in liquidateSAFE

  • debtAmount- see safeDebt in liquidateSAFE

  • amountToRaise- see amountToRaise in liquidateSAFE

  • collateralAuctioneer- address of the CollateralAuctionHouse contract

  • auctionId- ID of the auction in the CollateralAuctionHouse

• SaveSAFE- emitted when the liquidated SAFE has a SAFESaviour attached to it and an external actor calls liquidateSAFE(bytes32, address).

  Contains:

  • collateralType- The collateral type of the saved SAFE

  • safe- SAFE address

  • collateralAdded- amount of collateral added in the SAFE

• FailedSAFESave - emitted when a savior fails to rescue a SAFE. Contains:

  • failReason - the reason for failure

• ProtectSAFE - emitted when a SAFE user chooses a SAFE savior for their position. Contains:

  • collateralType - the collateral type locked in the protected SAFE

  • safe - the SAFE's address

  • saviour - the savior's address

Notes

• liquidateSAFEwill not leave a SAFE with debt and no collateral

• liquidateSAFE will not leave a SAFE dusty

• liquidateSAFE will not start a new auction if amountToRaise + currentOnAuctionSystemCoins exceeds onAuctionSystemCoinLimit

• protectSAFE will revert if the chosen SAFESaviour address was not whitelisted by governance.

3. Walkthrough

liquidateSAFE can be called at any time but will only succeed if the target SAFE is underwater. A SAFE is underwater when the result of its collateral (lockedCollateral) multiplied by the collateral's liquidation price (liquidationPrice) is smaller than its present value debt (generatedDebt times the collateral's accumulatedRates).

liquidationPrice is the oracle-reported price scaled by the collateral's liquidation ratio. There is a clear distinction between liquidation and safety ratios (even though the two can be equal in value):

• Safety ratios are the minimum collateralization ratios used when generating debt against a SAFE's collateral. They can be more conservative (higher) than liquidation ratios

• Liquidation ratios are the minimum collateralization ratios under which SAFEs are liquidated

liquidateSAFE may terminate early if the owner of the SAFE that's being targeted protected their position with a saviour that manages to save it from liquidation.