Aave Liquidation

A Model Context Protocol (MCP) server for analyzing Aave V3 liquidation opportunities on Ethereum mainnet. This tool enables AI assistants like Claude to interact with Aave protocol data, monitor user positions, and identify liquidation opportunities.

Features

🔍 Health Factor Monitoring

• Real-time health factor calculation for any Ethereum address
• Multi-threshold risk detection:
  • HEALTHY: Health Factor > 1.05
  • AT_RISK: 1.0 < HF < 1.05
  • LIQUIDATABLE: HF < 1.0
• Automatic risk level classification (HIGH, MEDIUM, LOW)
• Account summary with collateral, debt, and borrow capacity

💰 Liquidation Analysis

• Detailed position breakdown by asset
• Profit estimation for liquidation opportunities
• Collateral and debt composition analysis
• Liquidation bonus calculation (asset-specific)
• Risk scoring based on multiple factors

📊 Position Tracking

• Complete portfolio view for any address
• Asset-by-asset breakdown of deposits and borrows
• Collateral status for each asset
• Real-time balance updates from on-chain data

🔢 Batch Operations

• Check up to 20 addresses simultaneously
• Parallel processing for faster results
• Summary statistics (liquidatable count, at-risk count, etc.)
• Bulk risk assessment for portfolio monitoring

💲 Price & Protocol Data

• Real-time asset prices from Aave oracle
• USD-denominated values for all positions
• Reserve (asset) listing with full configuration
• LTV, liquidation thresholds, and bonuses by asset
• Current block number for data verification

What Makes This Different

Unlike existing liquidation bots that execute liquidations, this MCP server focuses on:

• Analysis over Execution: Provides data and insights rather than executing transactions
• AI-First Design: Optimized for integration with AI assistants via MCP protocol
• Educational Value: Helps users understand DeFi liquidation mechanics
• Research Tool: Useful for strategy development and risk analysis

Installation

Prerequisites

• Node.js 18 or higher
• An Ethereum RPC endpoint (Alchemy, Infura, QuickNode, or your own node)

Setup

1. Clone or download this repository

2. Install dependencies:

   npm install
   

3. Configure environment variables:

   cp .env.example .env
   # Edit .env and add your Ethereum RPC URL
   

4. Build the project:

   npm run build
   

Configuration

Environment Variables

Create a .env file in the project root:

# Required: Ethereum RPC endpoint
ETHEREUM_RPC_URL=https://eth-mainnet.g.alchemy.com/v2/YOUR_API_KEY

# Optional: Health factor warning threshold (default: 1.05)
HEALTH_FACTOR_THRESHOLD=1.05

Getting an RPC Endpoint

You can get a free Ethereum RPC endpoint from:

• Alchemy: https://www.alchemy.com/ (Recommended, 300M compute units/month free)
• Infura: https://www.infura.io/ (100k requests/day free)
• QuickNode: https://www.quicknode.com/ (Free tier available)

MCP Configuration

Add this server to your Claude Desktop configuration file:

MacOS: ~/Library/Application Support/Claude/claude_desktop_config.json

Windows: %APPDATA%/Claude/claude_desktop_config.json

{
  "mcpServers": {
    "aave-liquidation": {
      "command": "node",
      "args": ["/ABSOLUTE/PATH/TO/aave-liquidation-mcp/build/index.js"],
      "env": {
        "ETHEREUM_RPC_URL": "https://eth-mainnet.g.alchemy.com/v2/YOUR_API_KEY"
      }
    }
  }
}

Replace /ABSOLUTE/PATH/TO/ with the actual path to your installation.

Quick Demo Scripts

Test the server functionality without MCP configuration:

# Get current ETH price
npm run demo:price

# View all Aave reserves (categorized)
npm run demo:reserves

# Run comprehensive connection test
npm run test:real-data

Available Tools (8 Total)

1. get_user_health

Get health factor and account data for a specific address.

Input:

{
  "address": "0x742d35Cc6634C0532925a3b844Bc454e4438f44e"
}

Output:

{
  "address": "0x742d35Cc6634C0532925a3b844Bc454e4438f44e",
  "healthFactor": "1.234",
  "totalCollateralUSD": "150000.00",
  "totalDebtUSD": "100000.00",
  "availableBorrowsUSD": "20000.00",
  "liquidationThreshold": "0.85",
  "ltv": "0.80",
  "isLiquidatable": false,
  "isAtRisk": false,
  "status": "HEALTHY"
}

2. analyze_liquidation

Analyze a position for liquidation opportunity with detailed breakdown.

Input:

{
  "address": "0x742d35Cc6634C0532925a3b844Bc454e4438f44e"
}

Output:

{
  "userAddress": "0x742d35Cc6634C0532925a3b844Bc454e4438f44e",
  "healthFactor": "0.98",
  "totalCollateralUSD": "150000.00",
  "totalDebtUSD": "140000.00",
  "riskLevel": "HIGH",
  "potentialProfit": "7000.00",
  "collateralAssets": [...],
  "debtAssets": [...]
}

3. get_user_positions

Get detailed collateral and debt positions for an address.

Input:

{
  "address": "0x742d35Cc6634C0532925a3b844Bc454e4438f44e"
}

4. get_aave_reserves

Get list of all available Aave V3 reserves with their configurations.

Input: None required

Output: List of all reserves with LTV, liquidation threshold, liquidation bonus, etc.

5. get_asset_price

Get current USD price for a specific asset from Aave oracle.

Input:

{
  "assetAddress": "0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2"
}

6. get_protocol_status

Get Aave V3 protocol status and current block number.

Input: None required

7. batch_check_addresses

Check multiple addresses at once for liquidation opportunities (max 20 addresses per request).

Input:

{
  "addresses": [
    "0x742d35Cc6634C0532925a3b844Bc454e4438f44e",
    "0xAnotherAddress...",
    "0xYetAnotherAddress..."
  ]
}

Output:

{
  "totalChecked": 3,
  "liquidatable": 1,
  "atRisk": 1,
  "healthy": 1,
  "results": [...]
}

8. validate_address

Validate if a string is a properly formatted Ethereum address.

Input:

{
  "address": "0x742d35Cc6634C0532925a3b844Bc454e4438f44e"
}

Output:

{
  "address": "0x742d35Cc6634C0532925a3b844Bc454e4438f44e",
  "isValid": true,
  "message": "Valid Ethereum address format"
}

Usage Examples

Once configured with Claude Desktop, you can ask questions like:

Single Address Queries:

• "Check the health factor for address 0x742d35Cc6634C0532925a3b844Bc454e4438f44e"
• "Are there any liquidation opportunities for this address?"
• "What are the collateral positions for this user?"
• "Analyze this address for liquidation risk: 0x..."

Batch Operations:

• "Check these 5 addresses for liquidation risk: [paste addresses]"
• "Monitor multiple wallets and tell me which ones are at risk"
• "Compare liquidation risk across these addresses"

Protocol Queries:

• "Show me all available assets in Aave V3"
• "What's the current price of WETH in Aave?"
• "What are the liquidation parameters for USDC?"
• "What's the current block number?"

Validation:

• "Is this a valid Ethereum address: 0x123..."
• "Validate these addresses before I check them"

Setup Verification

After installing and configuring the server, restart Claude Desktop and verify it's working:

Ask Claude:

Can you check the Aave protocol status?

Claude will use the get_protocol_status tool and should return something like:

{
  "protocol": "Aave V3",
  "network": "Ethereum Mainnet",
  "blockNumber": 18500000,
  "poolAddress": "0x87870Bca3F3fD6335C3F4ce8392D69350B4fA4E2",
  "status": "operational"
}

Understanding the Data

Health Factor

• > 1.0: Position is healthy
• < 1.05: Position is at risk (warning)
• < 1.0: Position can be liquidated

Risk Levels

• HIGH: Health factor < 1.0 (immediately liquidatable)
• MEDIUM: Health factor between 1.0 and 1.02
• LOW: Health factor between 1.02 and 1.05

Liquidation Bonus

When a position is liquidated, the liquidator receives a bonus (typically 5-10% depending on the asset). The potentialProfit field estimates this bonus.

Development

Project Structure

aave-liquidation-mcp/
├── src/
│   ├── index.ts           # MCP server implementation
│   ├── aave-client.ts     # Aave protocol interaction logic
│   ├── constants.ts       # Contract addresses and ABIs
│   └── types.ts           # TypeScript type definitions
├── build/                 # Compiled JavaScript output
├── package.json
├── tsconfig.json
└── .env                   # Configuration

Building

npm run build

Development Mode

npm run dev

This will watch for file changes and recompile automatically.

Technical Details

Aave V3 Contracts (Ethereum Mainnet)

• Pool: 0x87870Bca3F3fD6335C3F4ce8392D69350B4fA4E2
• Pool Data Provider: 0x7B4EB56E7CD4b454BA8ff71E4518426369a138a3
• Oracle: 0x54586bE62E3c3580375aE3723C145253060Ca0C2

Dependencies

• @modelcontextprotocol/sdk: MCP protocol implementation
• ethers: Ethereum library for contract interaction
• dotenv: Environment variable management

Limitations

• Mainnet Only: Currently supports Ethereum mainnet only
• Read-Only: Does not execute liquidations, only analyzes opportunities
• Rate Limits: Subject to your RPC provider's rate limits
• Gas Estimation: Profit calculations are estimates and don't account for gas costs

Future Enhancements

• Multi-chain support (Arbitrum, Optimism, Polygon, Base)
• Historical liquidation data and analytics
• Advanced profit calculations including gas costs
• Webhook notifications for at-risk positions
• Integration with The Graph for historical queries
• Support for Aave V2 alongside V3

Resources

• Aave V3 Documentation
• Model Context Protocol
• Liquidation Guide

License

MIT

Contributing

Contributions are welcome! Please feel free to submit a Pull Request.

Disclaimer

This tool is for educational and research purposes only. Liquidating positions on DeFi protocols involves financial risk. Always do your own research and understand the risks before participating in DeFi activities.