Liquidation Threshold Attacks

Liquidation threshold attacks involve manipulating the price of an asset to force a user's position into a liquidation state, even if the user is technically solvent. This is often done by causing a momentary dip in the asset's price on a specific oracle or liquidity pool, triggering the protocol's liquidation logic.

The attacker then collects the liquidation bonus, effectively stealing value from the user. These attacks are a significant risk for decentralized lending and derivative platforms that rely on single-source price feeds.

To defend against them, protocols implement multi-source oracles, time-weighted average prices, and liquidation delays. Understanding how these attacks work is crucial for both users, who need to choose secure platforms, and developers, who must build resilient systems.

By designing protocols that are resistant to manipulation, the ecosystem can provide a safer environment for leveraged trading and long-term investment.