X @Ammalgam (δ, γ)
Ammalgam (δ, γ)·2026-03-02 17:00
RT duelingGalois (δ, γ) (@duelinggalois)Bad debt in DeFi is not just caused by hacks. A lot of it happens when markets move faster than liquidations can clear.Let's take a simple case: you deposit $100 in collateral and borrow $75. If the value of your collateral falls or your debt rises, your loan-to-value increases. Once it crosses a threshold, a Dutch auction begins. Liquidators are offered a growing premium to repay the debt and seize the collateral.The problem with that is that markets don't wait.If vo ...