CoinVoice has recently learned that Aave officially stated on platform X that since its establishment, Aave has processed nearly 295,000 liquidations, amounting to over 3.3 billion USD. These liquidations protect the protocol from bad debts and maintain system health. In light of this, based on the V3 liquidation mechanism, Aave V4 introduces a redesigned and optimized liquidation mechanism.

Its main advantages include:

1. Introduction of dynamic liquidation thresholds and an automated auction mechanism, reducing manual intervention and improving liquidation speed and capital efficiency;

2. Lowering slippage and manipulation risks during the liquidation process through integration of on-chain oracles and MEV (Miner Extractable Value) protections;

3. Supporting partial liquidations and batch processing, allowing borrowers to avoid full liquidation at lower costs.[Original link]