Liquidation Auction Duration

Liquidation auction duration is the total time allotted for an auction to complete before the collateral is either sold or the auction fails. If the duration is too short, the market may not have enough time to absorb the assets, leading to high slippage.

If it is too long, the protocol remains at risk of further price drops while the debt remains outstanding. Finding the optimal duration requires balancing the need for quick debt repayment with the need to allow enough time for market participants to evaluate the collateral.

This parameter is often dynamic, adjusting based on current market volatility and the total size of the position being liquidated.