As Lista DAO’s Lending product grows, we’re excited to introduce the Liquidation Zone, a new feature designed to enhance the efficiency and resilience of our liquidation process. With the increased diversity of assets, including non-standard assets like pt-tokens, our existing liquidation system faces challenges in handling large-scale or complex liquidations.

The Liquidation Zone addresses these by enabling community-driven liquidations, ensuring stability and transparency while rewarding community participation.

Our current liquidation system relies on Dutch auctions and official bots, but it can struggle with:

• Large-Scale Liquidations: Single-asset liquidations may reach $5M–$10M, exceeding the on-chain liquidity of most assets on networks like BNB Chain.

• Non-Standard Assets: Assets like pt-tokens (e.g., pt-susde, pt-clisBNB) pose unique risks due to their complex structures, especially post-maturity.

• Market Volatility: Extreme price swings or network congestion can disrupt bot-driven liquidations, increasing systemic risk.

The Liquidation Zone solves these challenges by opening liquidation opportunities to the community when official bots can’t keep up, ensuring faster and more reliable outcomes.

When a collateral position meets specific criteria, it enters the Liquidation Zone, where community members with arbitrage capabilities can step in to liquidate assets at discounted prices. Lista DAO collects a fixed penalty fee, while liquidators keep the remaining profits. This process is triggered under the following conditions:

• High-Value Liquidations: Positions exceeding $1M in value.

• Failed Liquidation Attempts: Official bots fail to clear assets after multiple tries (e.g., over 1 hour).

• Manual Designation: Protocol operators flag positions for special cases, such as emergency responses.

When triggered, our team is notified by bots and manually enables community liquidation. Once completed, permissions are revoked to maintain control.

• Profit Opportunities: Community liquidators can acquire assets at attractive prices, earning profits through arbitrage.

• System Stability: Community participation ensures liquidations are processed efficiently, reducing bad debt risks.

• Transparency: Open processes build trust and showcase Lista DAO’s commitment to resilience.

• Engagement: The Liquidation Zone incentivizes active community involvement, fostering a competitive and supportive ecosystem.

The Liquidation Zone is a significant step toward making Lista DAO’s Lending product more robust and community-driven. By combining official bot efficiency with community participation, we’re creating a liquidation system that can handle the challenges of today’s dynamic DeFi landscape. Stay tuned for more updates as we continue to innovate and empower our community!

As Lista DAO’s Lending product grows, we’re excited to introduce the Liquidation Zone, a new feature designed to enhance the efficiency and resilience of our liquidation process. With the increased diversity of assets, including non-standard assets like pt-tokens, our existing liquidation system faces challenges in handling large-scale or complex liquidations.

The Liquidation Zone addresses these by enabling community-driven liquidations, ensuring stability and transparency while rewarding community participation.

Our current liquidation system relies on Dutch auctions and official bots, but it can struggle with:

• Large-Scale Liquidations: Single-asset liquidations may reach $5M–$10M, exceeding the on-chain liquidity of most assets on networks like BNB Chain.

• Non-Standard Assets: Assets like pt-tokens (e.g., pt-susde, pt-clisBNB) pose unique risks due to their complex structures, especially post-maturity.

• Market Volatility: Extreme price swings or network congestion can disrupt bot-driven liquidations, increasing systemic risk.

The Liquidation Zone solves these challenges by opening liquidation opportunities to the community when official bots can’t keep up, ensuring faster and more reliable outcomes.

When a collateral position meets specific criteria, it enters the Liquidation Zone, where community members with arbitrage capabilities can step in to liquidate assets at discounted prices. Lista DAO collects a fixed penalty fee, while liquidators keep the remaining profits. This process is triggered under the following conditions:

• High-Value Liquidations: Positions exceeding $1M in value.

• Failed Liquidation Attempts: Official bots fail to clear assets after multiple tries (e.g., over 1 hour).

• Manual Designation: Protocol operators flag positions for special cases, such as emergency responses.

When triggered, our team is notified by bots and manually enables community liquidation. Once completed, permissions are revoked to maintain control.

• Profit Opportunities: Community liquidators can acquire assets at attractive prices, earning profits through arbitrage.

• System Stability: Community participation ensures liquidations are processed efficiently, reducing bad debt risks.

• Transparency: Open processes build trust and showcase Lista DAO’s commitment to resilience.

• Engagement: The Liquidation Zone incentivizes active community involvement, fostering a competitive and supportive ecosystem.

The Liquidation Zone is a significant step toward making Lista DAO’s Lending product more robust and community-driven. By combining official bot efficiency with community participation, we’re creating a liquidation system that can handle the challenges of today’s dynamic DeFi landscape. Stay tuned for more updates as we continue to innovate and empower our community!