Liquidation Bot Architecture: Monitoring and Gas Strategy

Frequently Asked Questions

01.What is a DeFi liquidation bot?

A liquidation bot is an off-chain program that continuously monitors borrower positions on a lending protocol, computes health factors from live oracle prices, and submits a liquidation transaction the instant a position crosses the protocol's liquidation threshold, earning the liquidation bonus the protocol pays for restoring solvency.

02.How much collateral can a liquidation bot seize in one transaction?

On Aave V3, the close factor limits how much debt a liquidator can repay in a single call: a partial cap applies while the position's health factor stays above the protocol's critical threshold, and that cap lifts to allow full-debt repayment once the position falls below it, letting liquidators clear severely undercollateralized positions in one call instead of two sequential ones.

03.Why do liquidation bots need private transaction submission?

A liquidation transaction sitting in the public mempool reveals the exact profitable opportunity to every competing bot and to block builders who can insert a copy of the same call ahead of it, so production bots route through private order flow to prevent the liquidation bonus from being captured by a front-runner instead of the original detector.