LiquidationAuction overview

doc/dev/LiquidationAuction02.md

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+# LiquidationAuction02 Smart Contract Technical Overview
+
+## Contract Overview
+The `LiquidationAuction02` contract is focused on asset liquidation in case of collateralized debt positions (CDPs) becoming undercollateralized. It interacts with several other contracts within the system, such as `IVault`, `IVaultManagerParameters`, and `ICDPRegistry`.
+
+## Key Features
+
+### 1. Interfaces
+The contract integrates with multiple interfaces to interact with different components of the system:
+   - `IVault`
+   - `IVaultManagerParameters`
+   - `ICDPRegistry`
+   - `IAssetsBooleanParameters`
+
+### 2. Reentrancy Guard
+Implements `ReentrancyGuard` to prevent reentrant calls, enhancing security especially in financial operations.
+
+### 3. Event
+Defines an event `Buyout` for logging buyout details.
+
+### 4. Constants
+Defines constants like `DENOMINATOR_1E2` and `WRAPPED_TO_UNDERLYING_ORACLE_TYPE` for internal calculations.
+
+### 5. Constructor
+Initializes the contract with addresses of `IVaultManagerParameters`, `ICDPRegistry`, and `IAssetsBooleanParameters`.
+
+### 6. Modifiers
+   - `checkpoint`: Ensures updating the CDP registry after certain actions.
+
+### 7. Main Function: `buyout`
+The `buyout` function allows users to buy out collateral from an undercollateralized position.
+   - Validates that liquidation is triggered.
+   - Calculates the buyout price and the collateral distribution between the liquidator and the original owner.
+   - Handles special conditions for asset transfer and position movement based on asset parameters.
+   - Interacts with `vault` to execute liquidation.
+
+### 8. Private Functions
+   - `_liquidate`: Internal function to facilitate liquidation logic.
+   - `_calcLiquidationParams`: Calculates parameters for liquidation including how collateral is distributed and the repayment amount.
+
+## Security Considerations
+The use of `ReentrancyGuard` suggests a focus on security, particularly against reentrancy attacks. The contract's functions interact with external contracts, necessitating careful consideration of trust assumptions and interactions.
+
+## Conclusion
+`LiquidationAuction02` is a crucial part of the liquidation mechanism in a DeFi ecosystem, handling the process of liquidating undercollateralized positions by calculating and distributing assets between parties involved.