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Use Case & Applications

Ensures liquidations only occur when positions are unhealthy, preventing unauthorized liquidations of healthy positions and protecting user funds. Critical for lending protocols (Aave, Compound, Morpho), margin trading platforms with position health monitoring, perpetual futures protocols with liquidation mechanisms, and any DeFi protocol using health factors for position solvency. Incorrect health factor validation could lead to unfair liquidations, protocol insolvency, or market manipulation through targeted liquidations.

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Explanation

Implements multi-layered liquidation health factor verification:
  • Pre-liquidation: forkPreState() captures health factor before liquidation, verifies position is actually unhealthy
  • Post-liquidation: forkPostState() verifies health factor improves after liquidation
  • Parameter validation: getCallInputs() monitors liquidation calls, validates seized assets and repaid shares are non-zero, enforces maximum liquidation amounts
  • registerCallTrigger(): Triggers on liquidation function calls
The assertion ensures only unhealthy positions can be liquidated, liquidations improve position health, and liquidation amounts remain within safe limits for proper protocol risk management. For more information about cheatcodes, see the Cheatcodes Documentation.

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Code Example

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.13;

import {Assertion} from "credible-std/Assertion.sol";
import {PhEvm} from "credible-std/PhEvm.sol";

contract LiquidationHealthFactorAssertion is Assertion {
    // Simple health factor constants (no scaling)
    uint256 constant LIQUIDATION_THRESHOLD = 100; // Below this = liquidatable
    uint256 constant MIN_HEALTH_FACTOR = 120; // Minimum safe health factor after liquidation

    function triggers() external view override {
        // Register trigger for liquidation function calls
        registerCallTrigger(this.assertHealthFactor.selector, ILendingProtocol.liquidate.selector);
    }

    // Check that liquidation can't happen if the position is healthy
    // Check that the health factor is improved after liquidation
    function assertHealthFactor() external {
        // Get the assertion adopter address
        ILendingProtocol adopter = ILendingProtocol(ph.getAssertionAdopter());

        // Get all liquidation calls in the transaction
        PhEvm.CallInputs[] memory callInputs = ph.getAllCallInputs(address(adopter), adopter.liquidate.selector);

        for (uint256 i = 0; i < callInputs.length; i++) {
            address borrower;
            uint256 seizedAssets;
            uint256 repaidDebt;

            // Decode liquidation parameters
            (borrower, seizedAssets, repaidDebt) = abi.decode(callInputs[i].input, (address, uint256, uint256));

            // Validate liquidation amounts
            require(seizedAssets > 0, "Zero assets seized");
            require(repaidDebt > 0, "Zero debt repaid");

            // Check health factor before liquidation
            ph.forkPreCall(callInputs[i].id);
            uint256 preHealthFactor = adopter.healthFactor(borrower);
            require(preHealthFactor <= LIQUIDATION_THRESHOLD, "Account not eligible for liquidation");

            // Check health factor after liquidation
            ph.forkPostCall(callInputs[i].id);
            uint256 postHealthFactor = adopter.healthFactor(borrower);

            // Verify the liquidation actually improved the position's health
            require(postHealthFactor > preHealthFactor, "Health factor did not improve after liquidation");

            // Ensure the position is now in a safe state above the minimum required health factor
            require(postHealthFactor >= MIN_HEALTH_FACTOR, "Position still unhealthy after liquidation");
        }
    }
}

// Simplified lending protocol interface
interface ILendingProtocol {
    function liquidate(address borrower, uint256 seizedAssets, uint256 repaidDebt)
        external
        returns (uint256, uint256);

    function isHealthy(address user) external view returns (bool);
    function healthFactor(address user) external view returns (uint256);
}
Note: Full examples with tests available in the Phylax Assertion Examples Repository.