Operating within lending protocols, the biggest concern is not actually market downturns, but being "flash sold" at a "秒杀价" and having your assets dumped. This is a real pain point.

In traditional lending protocols, once liquidation is triggered, your collateral is sold directly to the liquidation bots at a fixed, heavily discounted price. Assets are often sold at half or even lower than their value, which is what we call malicious liquidation. For borrowers, this mode carries too much risk.

However, some protocols do things differently. They introduce a Dutch auction mechanism for liquidation—where the liquidation price is bid down from high to low.

This logic sounds simple, but the actual protection it offers is completely different. The market will automatically find a relatively fair price to take over your collateral, rather than starting with a steep discount. This maximizes the residual value of your assets, significantly reducing bad debt penalties.

Especially in extreme market conditions—short-term oracle fluctuations, sudden liquidity drying up, or intense market volatility—this mechanism becomes a lifesaver. It prevents the tragedy of assets being flash sold at low prices due to short-term fluctuations.

For large funds, the security of the liquidation mechanism is always the top priority. Choosing a lending platform shouldn't just focus on high interest rates; the key is whether it can protect your principal during extreme market conditions. A robust risk control system that can withstand tests is truly a competitive advantage.