> For the complete documentation index, see [llms.txt](https://docs.goevolve.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.goevolve.xyz/defi-integration/liquidation-services.md).

# Liquidation Services

Evolve runs **Liquidation Services** to make **eUSD** safely usable across DeFi markets—especially for lending and borrowing use cases. When yield-bearing tokens like eUSD are accepted as collateral on protocols such as **Takara Lend** (fork of Compound V2)**, Yei, Morpho**, and similar markets, the health of the lending market depends on one thing:

**positions at risk must be liquidated quickly and reliably.**

Relying solely on secondary DEX liquidity for eUSD can be inefficient. Deep pools often require continuous, expensive liquidity incentives and can still fail under stress—exactly when liquidations matter most.

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#### Why Evolve provides liquidation execution

Evolve’s approach is to provide **specialized liquidation execution** as an alternative (or complement) to subsidized DEX depth.

Liquidation bots monitor supported lending markets for accounts approaching liquidation thresholds. When a position becomes liquidatable, the liquidation service:

1. **Purchases the collateral (eUSD)** and repays the borrower’s debt
2. Restores solvency in the lending market by closing risky positions
3. **Redeems acquired eUSD via native redemption rails**, converting it back into the designated redeem asset (per eUSD redemption rules)

This makes liquidation more predictable because it ties liquidity to **eUSD redeemability** and **operational SLAs**, rather than relying on volatile DEX pool depth.

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#### How the liquidation loop stays capital-efficient

Liquidation capacity is actively managed and continuously recycled.

Example (illustrative):

* The liquidation bot executes a **$1M liquidation** on a Morpho market
* It acquires **$1M of eUSD collateral**
* It promptly **redeems eUSD via the primary redemption path**
* Proceeds are recycled to replenish liquidation capital, ensuring the next liquidation can be executed on time

This loop reduces dependence on mercenary liquidity mining and helps keep lending markets healthy.

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#### Liquidation SLAs and capacity targets

Liquidation services target SLAs designed to support liquidating **up to \~10% of an eUSD vault’s TVL** at any time, **subject to**:

* lending venue constraints (market parameters, liquidation incentives, caps)
* eUSD redemption constraints (queue behavior, windows, liquidity policy)
* operational risk controls (limits, exposure, counterparties)

Capacity is monitored and rebalanced continuously.

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#### Why this matters

By making liquidations reliable, Evolve enables eUSD to function as a **robust collateral primitive** across SEI DeFi:

* healthier lending markets
* more predictable risk management under stress
* reduced need for expensive, continuous DEX liquidity incentives
* tighter coupling between collateral liquidity and the underlying **bankruptcy-remote segregated vault structure** via native redemption rails