Cascading liquidations: how bad is it and what can we do to stop it? Cascading liquidations is when liquidation of one asset causes other assets to liquidate, causing propagation of liquidation across the pools in the DEX. The following property is an attempt to articulate a solution:
We would like for it to be not possible to liquidate a vault that is not in debt
Deliverable
Still can't think of a way to do this informally / at the spec level. It's probably possible to do formally with respect to implementation code.
Notes
Youtube channel Finematics calls this a "Systemic risk"
Description
Cascading liquidations: how bad is it and what can we do to stop it? Cascading liquidations is when liquidation of one asset causes other assets to liquidate, causing propagation of liquidation across the pools in the DEX. The following property is an attempt to articulate a solution:
We would like for it to be not possible to liquidate a vault that is not in debt
Deliverable
Still can't think of a way to do this informally / at the spec level. It's probably possible to do formally with respect to implementation code.
Notes
Youtube channel Finematics calls this a "Systemic risk"