Liquidation Engine Race Conditions

Liquidation engine race conditions occur when multiple actors compete to trigger the liquidation of an under-collateralized position in a decentralized lending protocol. If the protocol's design does not handle concurrent liquidation requests effectively, it may lead to states where the engine becomes stuck or rewards are distributed incorrectly.

In some scenarios, an attacker can intentionally create conditions where they are the only ones capable of executing a liquidation, capturing the entire penalty fee. This race is often driven by the high gas costs and network congestion inherent to blockchain environments.

When the protocol fails to ensure fair access to liquidation opportunities, it undermines the solvency of the lending pool. These vulnerabilities often emerge during periods of high market volatility when many positions become under-collateralized simultaneously.

A robust engine must prioritize fairness and efficiency to prevent system-wide contagion.