# Liquidation Bots (Beta)

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**Disclaimer:** This tutorial is for educational purposes only. Liquidations involve financial risk. All participants should ensure compliance with applicable laws and regulations in their jurisdiction before performing any liquidation activities.
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In the Bonzo Protocol, liquidation occurs when a borrower's collateral value falls below a certain threshold due to changes in asset prices or accrued interest. Liquidators can repay a portion of the borrower's debt and receive a liquidation bonus on the collateral they obtain. This process helps maintain the protocol's solvency and incentivizes liquidators. 

This tutorial will demonstrate how to perform a liquidation on the Bonzo Protocol deployed on the Hedera blockchain using a custom smart contract and a Hardhat script.

#### **Core Concepts:**

* **Collateral Asset**: The asset supplied by the borrower.
* **Debt Asset**: The asset borrowed by the borrower.
* **Health Factor**: A value representing the safety of the borrower's position. A health factor below 1 indicates that the position is undercollateralized and can be liquidated.

#### **Example Code & Script Repositories:**

* **Smart Contract**: [LiquidationContract.sol](https://github.com/Bonzo-Labs/bonzo-finance-contracts/blob/main/contracts/examples/LiquidationContract.sol)
* **Sample Scripts**: [liquidationFlashLoan scripts](https://github.com/Bonzo-Labs/bonzo-finance-contracts/tree/main/scripts/liquidationFlashLoan)