
metsar
@metsar
Large investors use low liquidity markets to manipulate liquidation prices:
-Select trading pairs with low liquidity (such as some unpopular altcoin contracts)
During low liquidity periods, quickly push up or dump prices, causing users to be forced to liquidate
-Vault is forced to take over high-leverage liquidated positions, and large investors continue to manipulate prices using low liquidity, eventually forcing Vault to liquidate at a loss, while large investors profit from it
-Case: On some DEXs, tokens with insufficient liquidity have been manipulated using similar techniques, such as some Pump & Dump operations.
-📄Countermeasures: Add a liquidity monitoring mechanism. If the depth of a trading pair is below a certain standard, increase the margin requirement or reduce the proportion of positions that Vault takes over. Dynamically adjust the takeover logic of Vault, reduce its holding time when the market fluctuates too much, or use the AMM mechanism to smooth price shocks. 0 reply
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