NFT Collateral Loan Default Liquidation Tool

WHAT IT DOES

This tool enables DeFi lenders and liquidators to liquidate defaulted NFT-backed loans. When a borrower fails to repay an NFT loan by the due date, the loan enters a default state. Liquidators can then seize the collateral NFT to recover the loan amount. This is a critical mechanism for maintaining the health of NFT lending protocols. It connects to your wallet and reads the lending contract address, loan ID, default status, loan amount, collateral NFT, liquidation price, liquidation history, and timestamps. The tool signs and submits transactions to liquidate defaulted NFT loans, seize collateral, transfer assets, update liquidation status, record liquidation metadata, and emit liquidation events.

HOW TO USE

1. Connect your wallet using the wallet bridge (supports MetaMask, WalletConnect, and other EVM-compatible wallets).

2. Select the target network that matches your lending contract deployment.

3. Enter the lending contract address and the loan ID, then click "load contract" to initialize the connection.

4. Click "fetch default status" to retrieve the loan's default status, loan amount, collateral NFT address, and liquidation price.

5. Review the loan details — the loan must be in default state to liquidate.

6. Click "validate liquidation" to verify that the loan is defaulted and has collateral to seize.

7. Click "check liquidation history" to view your past liquidations.

8. Review the loan amount, collateral NFT, and liquidation price before executing.

9. Click "liquidate loan" to sign and submit the transaction that seizes the collateral NFT.

TECHNICAL MECHANISM

The tool uses ethers.js v5.7.2 to interact with any EVM-compatible lending contract that implements a standard liquidation interface (getDefaultStatus(uint256) view returns (bool), getLoanDetails(uint256) view returns (uint256, address, uint256), liquidate(uint256) external, getLiquidationHistory(address) view). The getDefaultStatus view returns whether the loan is in default. The getLoanDetails view returns the loan amount, collateral NFT address, and liquidation price. The liquidate function validates that the loan is in default, transfers the collateral NFT to the liquidator, and updates the loan status to "liquidated." The contract may also distribute any remaining funds to the lender or borrower. The contract maintains a history of liquidations, storing timestamps and amounts for audit purposes. Transaction handling follows EIP-1559 gas price calculations using receipt.effectiveGasPrice for accurate cost reporting. Liquidation metadata is recorded both in the contract's history and locally for the user's reference.

WHAT IT CANNOT SEE

This tool operates purely on-chain and cannot verify off-chain collateral valuation — it does not check whether the collateral value is accurate or based on reliable data sources. It cannot detect price manipulation — the tool cannot identify attempts to manipulate the NFT's perceived value. It cannot ensure liquidation fairness — the tool does not verify that the liquidation is fair to both parties. It cannot guarantee collateral recovery — the NFT may be illiquid or hard to sell. The tool also cannot verify that liquidation is justified — it relies on the contract's default status and does not independently verify the loan's delinquency.

PLEASE NOTE

This tool works exclusively with EVM-compatible blockchain networks (Ethereum, Polygon, Arbitrum, Optimism, Base, etc.). It requires the lending contract to implement the liquidation interface described above. All transactions incur gas fees paid by the connected wallet. The tool maintains no persistent storage — all state is refreshed from the blockchain on each session. Liquidating a loan is a significant action — ensure the loan is genuinely in default before proceeding. Liquidators assume the risk of holding the collateral NFT, which may have uncertain value. Always verify the loan's default status and the liquidation price before executing. Consider the liquidity of the collateral NFT before liquidating.