When a borrower's health is negative and they do not have enough stablecoin as collateral to pay off their debt, you can perform an extended liquidation. An extended liquidation relies on a callbacker contract to convert their non-stablecoin collateral before performing a liquidation. This script shows how it is accomplished.
This is part of a series of lessons build atop the curvefi/liquidation-demo repository by Curve team member @Macket.
When a user is in bad health and their debt is not covered by stablecoin collateral, anybody may run an "extended liquidation" by calling the liquidate_extended function.
The min_x argument is the minimum amount of stablecoins to receive, to avoid sandwich attack.
def liquidate_extended(user: address, min_x: uint256, frac: uint256,
callbacker: address, callback_args: DynArray[uint256,5], callback_bytes: Bytes[10**4] = b""):
"""
@notice Peform a bad liquidation (or self-liquidation) of user if health is not good
@param min_x Minimal amount of stablecoin to receive (to avoid liquidators being sandwiched)
@param frac Fraction to liquidate; 100% = 10**18
@param callbacker Address of the callback contract
@param callback_args Extra arguments for the callback (up to 5) such as min_amount etc
"""
To perform an extended liquidation, you must pass the address of a "callbacker" contract responsible for converting collateral into stablecoin to pay off the debt. This script works off the example provided in Macket's Liquidation Demo that trades collateral through the Curve Router.