An Empirical Study of DeFi Liquidations: Incentives, Risks, and Instabilities

  title={An Empirical Study of DeFi Liquidations: Incentives, Risks, and Instabilities},
  author={Kaihua Qin and Liyi Zhou and Pablo Gamito and Philipp Jovanovic and Arthur Gervais},
Financial speculators often seek to increase their potential gains with leverage. Debt is a popular form of leverage, and with over 39.88B USD of total value locked (TVL), the Decentralized Finance (DeFi) lending markets are thriving. Debts, however, entail the risks of liquidation, the process of selling the debt collateral at a discount to liquidators. Nevertheless, few quantitative insights are known about the existing liquidation mechanisms. In this paper, to the best of our knowledge, we… Expand
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