Solvency Engine Latency

Solvency engine latency refers to the time delay between a market event and the execution of a corresponding liquidation by the protocol's engine. In high-speed markets, even a few seconds of delay can lead to significant differences between the expected and actual liquidation price.

This latency can result in "bad debt" for the protocol if the collateral value drops below the debt value before the liquidation can be completed. Minimizing this latency is a critical engineering challenge, often involving the optimization of oracle updates and the speed of smart contract execution.