Scallop liquidation

An Obligation records the collateral and debt of a Scallop borrowing position. Separate Obligations remain independent, including those owned by the same address: collateral recorded in one does not support debt in another.

Weighted Debt Value

The combined USD value of borrowed assets, adjusted by each asset’s borrow_weight . A higher borrow weight makes that debt count more heavily when assessing the position.

Collateral Value for Liquidation

The combined USD value of deposited collateral, adjusted by each asset’s liquidation_factor .

Scallop expresses the ratio of weighted debt to collateral value for liquidation as the Risk Level. Equality puts the position at the 100% liquidation threshold. Collateral weight, which contributes to the capacity for new borrowing, is a separate parameter from the liquidation factor.

Falling collateral prices, rising borrowed-token prices, and accruing interest can increase the Risk Level without a new borrowing transaction. Repaying debt or adding eligible collateral to the affected Obligation can lower it, with collateral deposits limited by the asset’s remaining deposit capacity. Changes to applicable risk parameters can also alter the assessment.

The per-call limit uses the position’s total debt value across all debt types as its base. A liquidator may repay less than the maximum. If the position remains unhealthy afterward, further calls can follow, each capped at 20% of the remaining total debt value.

The small-debt exception permits full repayment in one call when total debt is under $10. The exception concerns the position’s total debt, so an individual debt asset worth less than $10 does not establish eligibility for full repayment when the position has other debt.

View full-size image

A successful liquidation reduces the borrower’s debt by the full amount that the liquidator repays. The collateral removed has a greater value than that debt reduction because the borrower incurs a liquidation penalty.

Scallop’s Liquidation documentation describes collateral-specific penalties with a maximum of 20% and liquidator discounts with a maximum of 15%. It assigns the difference between the penalty and discount to the protocol as collateral-side revenue. The repayment cap measures a share of outstanding debt; the penalty and discount govern the collateral exchanged for that repayment.

Liquidation is permissionless, with no whitelist required. Other participants can liquidate an eligible position, while owner-authorized borrowing and collateral withdrawal require the matching ObligationKey .

The Liquidation Function integration guide specifies an oracle-price update before the liquidation call within the Sui programmable transaction block. For the documented call, the liquidator supplies a coin object containing the debt asset being repaid and selects a collateral type held in the Obligation. The call returns any unused repayment coins and the seized collateral. The guide also documents LiquidateEventV2 as the liquidation event. A submitted transaction alone does not establish that debt has been repaid; execution must succeed.

For Sui mainnet integrations, the documented SDK’s ScallopQuery exposes queryObligation(obligationId) to read the position. After successful execution, reconcile the debt reduction and collateral removal in that Obligation, then assess its updated weighted values. Further liquidation remains possible at a Risk Level of 100% or more; a position below that threshold is no longer eligible.