This help page explains how cryptact handles Aave’s Liquidation (forced liquidation) within its DeFi functionality.
1．About Liquidation in Aave
Aave is a DeFi lending platform that allows users to lend and borrow cryptocurrencies without intermediaries like exchanges. Users can use the cryptocurrencies they deposit as collateral to borrow other cryptocurrencies. However, if the value of the collateral decreases and falls below the required threshold, a forced liquidation occurs.
2．cryptact’s Handling of Liquidation
Regarding Auto Classification:
As of December 2025, liquidation transactions on Aave are automatically detected on EVM chains. However, for other chains, automatic detection is not yet supported, so please select the appropriate transaction type manually on the transaction list page. (For how to resolve transactions requiring classification, please refer to this page.)Please note that the following example is provided to explain how cryptact processes transactions and does not reflect the actual calculations or figures used on Aave. Also, results may vary depending on partial liquidations, collateralization ratios, fees, and other factors.
Example: Assume you can borrow up to 80% of the value of your USDC collateral on Aave.
- You provide 1 BTC as collateral when the value of BTC is 65,000 USDC and borrow 52,000 USDC.
- However, the price of BTC drops to 60,000 USDC, resulting in insufficient collateral, so you can now borrow only up to 48,000 USDC.
- Another user liquidates your position, using the collateral to repay your debt. The liquidation process is as follows:
The following liquidation record actually reflects the liquidator’s actions, but in cryptact it is recorded as actions by the user who supplied the collateral. This is because the user who deposited collateral has recorded both a LEND and BORROW transaction history, and these transaction histories need to be closed out. Please note that the liquidator only sees a BONUS entry in their transaction list when item 4 occurs.
Also, the liquidation flow described below assumes that your LEND (1 BTC) and BORROW (52,000 USDC) transactions are already registered in cryptact.
（1）Recover 1 BTC (Transaction Type: /RECOVER)
This is an action performed by the liquidator. The liquidator recovers the borrower’s collateral, which is 1 BTC.
（2）Sell 1 BTC for 60,000 USDC (Transaction Type: SELL)
This is an action performed by the liquidator. The liquidator sells the recovered 1 BTC on the market, obtaining 60,000 USDC.
（3）Repay 52,000 USDC to settle the debt (Transaction Type: RETURN)
This is an action performed by the liquidator. Out of the 60,000 USDC, the liquidator uses 52,000 USDC to repay the borrower’s debt.
（4）8,000 USDC loss (bonus paid to the liquidator) (Transaction Type: LOSS)
The person providing the collateral incurs a loss. Out of the 60,000 USDC, 52,000 USDC is used to repay the debt, and the remaining 8,000 USDC is given to the liquidator as a bonus.