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Morphine offers a flexible manners of performing a liquidation
  • A first option for a liquidator is to refund the unhealthy sub account of the borrower by repaying his debt
  • The second option for a liquidator is to flash loan the unhealthy sub account and swapping everything into the debt token before refunding the unhealthy account of the borrower. In this way, you don't even need to spend any assets.
While there are many solutions and research regarding liquidations, we opted for a one-shot liquidation with flat tax fees for the following reasons:
  • Speed: One-shot liquidations can be executed quickly, which can help to maintain the stability of the platform by reducing the time it takes to close undercollateralized positions. Because users can deploy sub accounts with until 15x time more buying power, volatility can rapidly create bad debt.
  • Simplicity: A one-shot liquidation process involves closing a position in a single transaction, making it easier to understand and implement. This can be beneficial for both users and developers, as it simplifies the liquidation process and reduces the complexity of the underlying smart contracts.
  • Transparency: With a flat tax fee as the liquidation premium, users can quickly understand the costs associated with liquidation. This transparency can help users make informed decisions about risk management and better anticipate the consequences of their positions being liquidated.
  • Incentivized liquidators: The flat tax fee serves as an incentive for liquidators to participate in the liquidation process. By offering a fixed liquidation premium, we can attract more liquidators to the platform, ensuring that undercollateralized positions are promptly addressed.