00000nam 2200000zi 4500 9.951207 CaOODSP 20250520114750 m o d f cr |n||||||||| 250520t20252025oncd ob f|0| 0 eng d CaOODSP eng rda CaOODSP eng eng fre n-cn--- FB3-5/2025-12E-PDF Tian, Phoebe, author. Liquidation mechanisms and price impacts in DeFi / Phoebe Tian [and] Yu Zhu. [Ottawa] : Bank of Canada = Banque du Canada, 2025. ©2025 1 online resource (ii, 43 pages) : charts. text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2025-12 "Last updated: March 21, 2025." Includes bibliographical references. "This paper examines the price impacts of liquidations in decentralized finance (DeFi) lending and how they vary with fixed-spread and auction-based liquidation mechanisms. Using a theoretical framework, we show that the impact of these mechanisms depends on the liquidator participation cost, which determines the level of competition. Auctions mitigate the price impact of liquidations when the participation cost is low, but amplify them when it is high. Empirical analysis of Ethereum blockchain data shows that auction based liquidations lead to smaller price drops by increasing competition, which raises collateral prices and reduces liquidation volumes. These findings underscore the importance of liquidation design in promoting market stability and mitigating fire-sale risks in DeFi lending"--Abstract, page ii. Includes abstract in French. Digital currency. Fintech. Monnaie électronique. Technologie financière. Bank of Canada, issuing body. Staff working paper (Bank of Canada) 2025-12. (CaOODSP)9.806221 PDF 840 KB https://publications.gc.ca/collections/collection_2025/banque-bank-canada/FB3-5-2025-12-eng.pdf HTML N/A https://doi.org/10.34989/swp-2025-12