@witcheer
everyone obsesses over liquidation risk.
collateral ratios.
LTV thresholds.
position size.
but nobody asks: who decides when the liquidation happens? Oracles.
@chainlink (the industry standard) updates price feeds on two triggers:
(a) 0.5% price deviation from last report
(b) 20 minutes elapsed, whichever comes first
that means in low-volatility periods, prices can be stale for up to 20 minutes. In high-volatility periods, there's still a 0.5% buffer before the oracle updates. that lag is where MEV bots live.
think about it like this:
spot price on CEX drops 2% in 30 seconds (flash crash, whale dump, doesn't matter) >>> Oracle hasn't updated yet - still showing old price >>> MEV bot sees the arbitrage opportunity >>> bot triggers oracle update by calling the price feed >>> Oracle updates, your collateral ratio instantly breaches threshold >>> bot liquidates your position at the new (lower) price >>> bot buys your collateral at discount, sells at spot, pockets the spread.
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