Dolomite Margin Liquidator

Bot to automatically liquidate undercollateralized and expired Dolomite accounts.

Usage

Docker

Requires a running docker engine.

docker run \
  -e ACCOUNT_WALLET_ADDRESS=0x2c7536E3605D9C16a7a3D7b1898e529396a65c23 \
  -e ACCOUNT_WALLET_PRIVATE_KEY=0x4c0883a69102937d6231471b5dbb6204fe5129617082792ae468d01a3f362318 \
  -e BRIDGE_TOKEN_ADDRESS=<WETH_ADDRESS> \
  -e COLLATERAL_PREFERENCES=<SET IF LIQUIDATION_MODE IS `Simple`; IE "COLLATERAL_PREFERENCES=0,1,2"> \
  -e DOLOMITE_ACCOUNT_NUMBER=0 \
  -e ETHEREUM_NODE_URL=https://matic-mumbai.chainstacklabs.com \
  -e LIQUIDATION_MODE=Simple|SellWithInternalLiquidity|Generic \
  -e NETWORK_ID=80001 \
  -e OWED_PREFERENCES=<SET IF LIQUIDATION_MODE IS `Simple`; IE "OWED_PREFERENCES=2,1,0"> \
  -e REVERT_ON_FAIL_TO_SELL_COLLATERAL=<SET IF LIQUIDATION_MODE IS `SellWithInternalLiquidity`; IE "REVERT_ON_FAIL_TO_SELL_COLLATERAL=true|false"> \
  -e SEQUENTIAL_TRANSACTION_DELAY_MS=1000 \
  -e SUBGRAPH_URL=https://api.thegraph.com/subgraphs/name/dolomite-exchange/dolomite-v2-liquidator-mumbai \
  dolomiteprotocol/liquidator

Overview

This service will automatically liquidate undercollateralized and/or expired accounts on Dolomite.

This bot works for Dolomite (Margin-Trading) accounts. Use the envvars LIQUIDATIONS_ENABLED, EXPIRATIONS_ENABLED to control what kind of liquidations to perform.

Liquidations on Dolomite happen internally between Accounts, so you will need an already-funded Dolomite Account to use this liquidator bot. If you use the default of DOLOMITE_ACCOUNT_NUMBER=0, you can fund your Dolomite Margin Account on app.dolomite.io.

Successfully liquidating Accounts will modify your Dolomite Account balances. You can liquidate assets you do not have in your Account provided you have another asset as collateral, which will just cause your Dolomite Account Balance to go negative in that asset.

Dolomite Liquidations

Liquidations on Dolomite reward a 5% spread on top of the current oracle prices for the assets being liquidated and used as collateral. Example:

Undercollateralized Account:

+2 ETH
-350 DAI

Liquidator Account:

+100 ETH
-1000 DAI

Oracle Prices:

ETH Oracle Price: $200
DAI Oracle Price: $1

Fully liquidating this account would cause 350 DAI to be paid to zero out its balance, and would reward 350 DAI * ($1/DAI / $200/ETH) * 1.05 = 1.8375 ETH as payout. After the liquidation the account balances would be:

Undercollateralized Account:

+0.1625 ETH
0 DAI

Liquidator Account:

+101.8375 ETH
-1350 DAI

Configuration

Environment Variables

| ENV Variable | Description | |----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | ACCOUNT_POLL_INTERVAL_MS | How frequently to poll for liquidatable accounts. Defaults to 5000 milliseconds. | | ACCOUNT_WALLET_ADDRESS | REQUIRED Ethereum address of the Dolomite account owner that will do the liquidations. | | ACCOUNT_WALLET_PRIVATE_KEY | REQUIRED Ethereum private key the Dolomite account owner that will do the liquidations. Make sure that "0x" is at the start of it (MetaMask exports private keys without it). | | AUTO_DOWN_FREQUENCY_SECONDS | The duration in seconds after the bot starts that it should be automatically killed, so AWS (or whichever cloud provider being used) can restart the docker container. Useful in case the bot ever gets stuck. Defaults none undefined. | | BRIDGE_TOKEN_ADDRESS | REQUIRED The address of the bridge currency used as connecting asset to sell collateral for the debt token. On most Ethereum-based networks, this will be the WETH address. Meaning, Trades from LRC --> USDC are instead routed as such LRC --> WETH --> USDC. | | COLLATERAL_PREFERENCES | CONDITIONALLY REQUIRED A list of preferences for which collateral markets to receive first when liquidating. This variable is only required if LIQUIDATION_MODE is set to Simple. | | DOLOMITE_ACCOUNT_NUMBER | REQUIRED The Dolomite account number to use for the liquidating account. If you're not sure what this is, use 0. This will show up on app.dolomite.io if you connect with the same wallet. | | ETHEREUM_NODE_URL | REQUIRED The URL of the Ethereum node to use (e.g. an Alchemy or Infura endpoint). | | EXPIRATIONS_ENABLED | Whether to liquidate expired accounts. Defaults to true. | | EXPIRED_ACCOUNT_DELAY_SECONDS | How long to wait before liquidating expired accounts. The spread for liquidating expired accounts ramps up linearly from 0% to 5% over 5 minutes on Arbitrum One. Defaults to 300 seconds. | | GAS_PRICE_MULTIPLIER | How much to multiply the fast gas price by when sending transactions. Defaults to 1 but it is recommended users set this variable to something higher. | | GAS_PRICE_POLL_INTERVAL_MS | How frequently to update the gas price. Defaults to 15000 milliseconds. | | INITIAL_GAS_PRICE_WEI | The initial gas price used by the bot until the first successful poll occurs. Defaults to 10000000000 wei (10 gwei). | | LIQUIDATE_POLL_INTERVAL_MS | How frequently the bot should use current account, price, and market index data to check for liquidatable accounts and, if necessary, commit any liquidations on-chain. Defaults to 5000 milliseconds. | | LIQUIDATION_KEY_EXPIRATION_SECONDS | Amount of time in seconds to wait before trying to liquidate the same account again. Defaults to 120 seconds. | | LIQUIDATION_MODE | REQUIRED Must be one of Simple, SellWithInternalLiquidity, or Generic. Simple performs liquidations from the solid account and leaves the debt in there. SellWithInternalLiquidity attempts the liquidation using Dolomite's internal liquidity. Generic uses any combination of external or internal liquidity to perform the liquidations. | | LIQUIDATIONS_ENABLED | Whether to liquidate Dolomite accounts or not. Defaults to true. | | MARKET_POLL_INTERVAL_MS | How frequently to market information (including which markets exist, oracle prices, and margin premium information). Defaults to 5000 milliseconds. | | MIN_ACCOUNT_COLLATERALIZATION | The desired minimum collateralization of the liquidator account after completing a simple liquidation. Prevents the liquidator account from being at risk of being liquidated itself if the price of assets continues to move in some direction. Higher values are safer. e.g. 0.5 = 150% collateralization. This value is only used if LIQUIDATION_MODE is set to Simple. Defaults to 0.50 (150% collateralization). | | MIN_VALUE_LIQUIDATED | If you can liquidate less than this amount of value before hitting MIN_ACCOUNT_COLLATERALIZATION, then don't liquidate. This value is only used if LIQUIDATION_MODE is set to Simple. Defaults to 100000000000000000000000000000000000000 (100e36; 100 USD). | | MIN_VALUE_LIQUIDATED_FOR_EXTERNAL_SELL | If the amount to be liquidated for LIQUIDATION_MODE=SellWithExternalLiquidity is less than this amount, fallback to LIQUIDATION_MODE=Simple. Defaults to 1000000000000000000000000000000000000 (0.01e36; 0.01 USD). | | MIN_OWED_OUTPUT_AMOUNT_DISCOUNT | This parameter is only used if REVERT_ON_FAIL_TO_SELL_COLLATERAL is set to false. A discount to apply on the required output of the trade (from held collateral to owed balance), or else the transaction reverts. Must be less than 1.00 and greater than or equal to 0. This value is applied to the minOutputAmount of the trade from held amount to owed amount such that the outputted trade amount must be greater than or equal to owedBalance * (1.00 - discount). Defaults to 0.10 (10% discount). | | NETWORK_ID | REQUIRED Ethereum Network ID. This must match the chain ID sent back from ETHEREUM_NODE_URL. | | OWED_PREFERENCES | CONDITIONALLY REQUIRED A list of preferences for which markets to liquidate first on an account when liquidating. This variable is only required if LIQUIDATION_MODE is set to Simple. | | REVERT_ON_FAIL_TO_SELL_COLLATERAL | CONDITIONALLY REQUIRED Whether to revert the liquidation if the collateral cannot be sold to pay off the debt. If set to false and collateral cannot be liquidated to recover debt, the user will need to maintain sufficient collateralization to prevent being liquidated. This value is only used if LIQUIDATION_MODE is set to SellWithInternalLiquidity. | | RISK_PARAMS_POLL_INTERVAL_MS | How frequently to poll for risk params updates in milliseconds. Defaults to 30000 milliseconds. | | SEQUENTIAL_TRANSACTION_DELAY_MS | REQUIRED How long to wait between sending liquidation/expiration transactions. Useful for ensuring the liquidator's nonce is always correct and the Dolomite market price has time to reach equilibrium between many sequential liquidations, in case these sequential liquidations push the price far away from the Chainlink oracle price. | | SUBGRAPH_URL | REQUIRED The URL of the subgraph instance that contains margin account information. For Arbitrum One, the default URL is https://api.thegraph.com/subgraphs/name/dolomite-exchange/dolomite-v2-arbitrum |