For the liquidation we need to use a time weighted average price (TWAP) to avoid that people try to manipulate the price by buying large amounts from a LP pool and there by triggering liquidation using for example flash loans.
The Osmosis team is building a TWAP price fee, but this might be delayed. The question is if we use the spot price or build a TWAP price ourself. We will need to know how long time the TWAP is calculated for and if it is too long, we risk that we during a genuien market crash, don't liquidate any loans because the price crashes quicker than the time average can follow it down and we end up with a huge amount of loans where the collateral is less worth than the loan and the market is for the next long time trading at this new lower price level.
[] Discuss with Osmosis if use the spot price or build a isotonic TWAP
[] Figure out what is a good time length of the TWAP and what minus percentage deviation is acceptable.
For the liquidation we need to use a time weighted average price (TWAP) to avoid that people try to manipulate the price by buying large amounts from a LP pool and there by triggering liquidation using for example flash loans.
The Osmosis team is building a TWAP price fee, but this might be delayed. The question is if we use the spot price or build a TWAP price ourself. We will need to know how long time the TWAP is calculated for and if it is too long, we risk that we during a genuien market crash, don't liquidate any loans because the price crashes quicker than the time average can follow it down and we end up with a huge amount of loans where the collateral is less worth than the loan and the market is for the next long time trading at this new lower price level.
[] Discuss with Osmosis if use the spot price or build a isotonic TWAP [] Figure out what is a good time length of the TWAP and what minus percentage deviation is acceptable.
+++ not finished writing +++
It should be short enough for