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What is the propagation speed of LST‑driven load cascades during slashes?
The propagation speed of an LST-driven liquidation cascade is nearly instantaneous, limited only by blockchain block times and oracle update frequencies. The process is automated and viciously efficient: a slash or price drop is detected by an oracle, which updates a price feed on a lending protocol. That protocol's smart contracts instantly identify undercollateralized positions and make them available for liquidation. Liquidator bots, competing for arbitrage, execute the liquidations within seconds, selling the seized LST collateral. This selling pushes the price down further, and the cycle repeats in the next block. This entire feedback loop can unfold over mere minutes, far too quickly for human intervention, demonstrating how DeFi's automation can turn a shock into a catastrophe at digital speed.
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