Time-Weighted Average Pricing

Time-Weighted Average Pricing is a method of calculating an asset's price by taking the average over a specific duration rather than using the current spot price. This smooths out short-term volatility and prevents transient price spikes from triggering unnecessary liquidations.

By using a time-weighted average, the protocol ensures that the liquidation trigger is based on a sustained price trend rather than a momentary flash crash or a temporary liquidity gap. This provides a more stable and predictable environment for both borrowers and liquidators.

It is a common technique used to make oracle feeds more resistant to manipulation and less sensitive to high-frequency market noise. Implementing this correctly requires choosing the right time window to balance responsiveness with stability.