Corpus ID: 221970077

Liquidations: DeFi on a Knife-edge

@article{Perez2020LiquidationsDO,
  title={Liquidations: DeFi on a Knife-edge},
  author={Daniel Perez and Sam M. Werner and Jiahua Xu and B. Livshits},
  journal={arXiv: General Finance},
  year={2020}
}
The trustless nature of permissionless blockchains renders overcollateralization a key safety component relied upon by decentralized finance (DeFi) protocols. Nonetheless, factors such as price volatility may undermine this mechanism. In order to protect protocols from suffering losses, undercollateralized positions can be \textit{liquidated}. In this paper, we present the first in-depth empirical analysis of liquidations on protocols for loanable funds (PLFs). We examine Compound, one of the… Expand

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