Handle concurrency in a market crash
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Danogo is implementing parallel liquidation processing to avoid the bottlenecks seen in Indigo/Liqwid’s system during high-volatility events. Here’s how Danogo’s approach improves on existing Cardano DeFi architectures:
Indigo utilize traditional model where liquidation happens sequentially (one after another)
Liqwid utilize batchers to allow 4 or 8 liquidations to happen at the same time depends on each token market, but incur batching cost and market interruption during frequent batching.
Unlike Indigo/Liqwid models, Danogo does not use batcher and decouples each loan from the main pool.
This means every loan operates on its own execution thread, allowing:
Simultaneous liquidations, reducing delays during mass liquidations.
Faster collateral top-ups, giving borrowers real-time protection from liquidation.
In Indigo’s case, a single liquidation bot had to process each transaction one by one, leading to a two-hour queue during the ADA flash crash in 2023.
Danogo’s multi-threaded execution model ensures that no loan has to wait for another before being processed.
Danogo will provide technical documentation and APIs so that anyone can run their own liquidation bot.
This means that instead of relying on a single entity (which creates a bottleneck), multiple liquidation bots can run concurrently, leading to:
Faster liquidation processing.
Reduced risks of bad debt accumulation.
Increased decentralization, as liquidations are no longer controlled by a single entity.
Prevents Bad Debt: Faster liquidation prevents loan collateral from falling below the borrowed amount.
Ensures Market Stability: Borrowers can top-up collateral in real-time, reducing unnecessary liquidations.
Decentralization & Open Participation: By making liquidation tools publicly accessible, Danogo avoids centralization risks while improving system efficiency.
This approach significantly improves scalability, efficiency, and fairness in Cardano’s DeFi ecosystem. 🚀
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