Liquidations
• Overview
Each account's health on HyperLend is determined by a single value known as the health factor. This figure summarizes how well your portfolio is collateralized, effectively measuring its overall health.
• Liquidation
Liquidation occurs when a borrower's health factor falls below 1, indicating that their collateral value no longer sufficiently covers their loan/debt value. This situation can arise if the collateral decreases in value or the borrowed debt increases in value relative to each other. During a liquidation, a portion of the borrower's debt is repaid, and this amount plus a liquidation fee is deducted from the available collateral. Consequently, the liquidated debt portion is repaid.
• Liquidation Penalty
The liquidation penalty, or bonus for liquidators, varies based on the collateral asset. You can find the liquidation fee for each asset in the risk parameters section. For example, Joe deposits 5 ETH (when ETH is worth 1000 USDC) and borrows 4000 USDC. The next day, ETH value falls to $810, at which point Joe's health factor falls below 1. Since it's now below the liquidation threshold, a liquidator can repay the 4000 USDC loan and claim the 5 ETH (worth 4050 USDC, which they can immediately sell for a profit).
• Avoiding Liquidation
To prevent liquidation, you can improve your health factor by depositing more collateral assets or repaying part of your loan. Generally, repayments boost your health factor more significantly than deposits. It's crucial to monitor your health factor and maintain it at a high level to avoid liquidation. For instance, keeping your health factor above 2 provides a greater margin of safety.
• Becoming a Liquidator
Liquidations on HyperLend are open to anyone. If you spot an under-collateralized position, you can repay part of the borrower’s debt and claim a portion of their collateral at a discount — no whitelisting, no permissions. Whether you're running a custom keeper or just getting started, it's all composable.
Example Bot: github.com/hyperlendx/liquidator – a reference Rust bot that monitors positions and executes profitable liquidations.
Developer Docs: The core entry point for liquidations is the
liquidationCall()function. Review the ABI, required parameters, and operational flow here.
Liquidation Strategies & Cross-Chain Execution
1. Onchain Flash Loan + DEX Liquidation (HyperEVM-native)
Execute full liquidation atomically in one EVM transaction.
Ideal for low-latency trades with sufficient onchain liquidity.
Uses a flash loan to repay the borrow, sells collateral via DEX, and captures the bonus.
2. Upfront Capital + Orderbook Exit (Cross-Chain)
Liquidator uses own capital to repay debt on HyperEVM.
Collateral is bridged to HyperCore and sold via the deeper L1 orderbook.
Favored for assets like uBTC or uETH where orderbook liquidity is superior.
3. Debt Bridging + Orderbook Liquidation
Liquidator bridges debt token from Core → EVM, repays loan, acquires collateral.
Collateral is bridged back to Core and sold on the orderbook.
This is the default strategy assumed for protocol parameter tuning.
Higher latency and price risk but aligns with real-world liquidator setups.
Guidance for Liquidators:
Liquidators interacting with Hyperlend should be aware of the multiple viable strategies for executing liquidations, depending on their liquidity profile and desired execution venue. If operating natively on HyperEVM, liquidations can be performed atomically using flash loans, repaying debt and liquidating collateral via DEXs in a single transaction. Alternatively, if capital is concentrated on HyperCore, liquidators may bridge tokens to HyperEVM using the spotSend mechanism—ensuring the token is properly linked—then repay debt, obtain collateral, and bridge assets back to HyperCore for sale on a deeper L1 orderbook. When bridging from EVM to Core, ERC20 transfers should be directed to the system address of the linked token contract. Note that fungibility between Core and EVM spot assets is not always guaranteed; liquidators must refer to system caveats to assess slippage or market divergence risks during cross-chain transfers.
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