😑Liquidation
In general, liquidation of a trading position can occur due to the following four events or their combinations:
The price of a token A that a trader purchased decreases.
The price of a token B that a trader borrowed for a leveraged swap increases.
The position remains open for an extended period, causing the debt value associated with the position to approach the position's value.
Bubblebot community significantly raises the Liquidation Margin parameter through Governance.
A liquidation event does not occur spontaneously; it must be initiated by a margin caller, an individual or entity equipped with specialized software capable of monitoring multiple leveraged trading positions and executing timely liquidations. Anyone can become a margin caller by employing the liquidation software provided by Bubblebot. In the event of a successful liquidation, the margin caller receives a liquidation reward, determined as a percentage of the total position size and defined through Governance. When a margin caller initiates a liquidation transaction, Bubblebot smart contract verifies whether the liquidation condition is met. If satisfied, the liquidation proceeds, and all parties are compensated in the following order:
The margin caller receives a liquidation reward (LR).
Subsequently, the liquidity pool is reimbursed for the debt along with accrued interest.
If any funds remain, the trader receives the remaining amount."
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