When a line of bright green "Liquidation Successful" pops up on the screen at three in the morning, I know I have finally evolved from the fisherman struggling in the candlestick chart to the hawk that glides coldly and low over the digital wasteland. In the jungle rules of the crypto world, most people focus on rising dividends, while liquidators focus on the moment of system collapse.
Liquidation monitoring is essentially the "cleaner" logic of the DeFi world. If you consider the Falcon protocol as a precision scale that allows for high-leverage gambling, then the liquidation code is the self-healing mechanism that automatically triggers when the scale becomes unbalanced. The market in 2025 has bid farewell to the wild, and the Falcon protocol, known for its high performance in synthetic asset lending, often has a liquidation window of only a few short blocks. This requires your monitoring script to be not only "fast," but also as precise as a scalpel.
From a technical architecture perspective, Falcon's liquidation mechanism introduces a 'dynamic bad debt buffer' model. Unlike traditional Aave or Compound, it adjusts the liquidation threshold in real-time during market volatility. The core of my code is to hook the price feed pool of Falcon's oracle and the on-chain collateral status in real-time through WebSocket. When the health coefficient of a position falls below the critical point of 1.02, the script must complete the signing, packaging, and pushing to the highest priority MEV relay within 0.5 seconds. It's like being on a highway, where not only do you need to spot the flaws of the car in front of you, but you must also rush ahead of all overtakers to occupy that only overtaking lane.
Currently, Falcon's total locked value in December has exceeded the hundred billion dollar mark, backed by countless aggressive leveraged funds. In the current long-short game, the liquidity premium fluctuations of BNB and ETH provide rich soil for liquidators. According to my on-chain observations over the past week, the average liquidation reward ratio of Falcon remains between 3% and 5%, seemingly small, but in the tens of millions of bad debt liquidations, this is enough to turn a quiet midnight into a golden spectacle.
However, being a hunter does not mean there are no risks. The most troublesome risk when writing this monitoring system was the 'toxic liquidity' risk. If the oracle experiences delays, or the liquidity of the target asset depletes during a liquidation moment, you may successfully liquidate but cannot immediately realize it on the DEX, leading to a rapid devaluation of your assets, turning from a hunter into a 'bag holder' trapped in a position. Therefore, I integrated an automated hedging module into my code: as soon as a liquidation is triggered, a peer hedge will be opened in another protocol with deeper liquidity.
The current DeFi ecosystem has entered the modular era, and liquidation is no longer a solo operation. The future trend is liquidation as a service (LaaS), where more protocols will tokenize liquidation rights or outsource them to professional DAO organizations. For ordinary developers, the threshold is rapidly rising, and simple single-node monitoring can no longer keep up with those professional quantitative teams that have 'settled' next to node servers.
If you also want to share in the tail-end returns of DeFi in 2025, my advice is: do not try to hunt the big fish that everyone is watching, but focus on the collateral pools of non-mainstream coins where competition is smaller, and the long-tail effect is more favorable for individual developers. At the same time, ensure that your RPC provider has extremely low latency, because in the liquidation battlefield, even a delay of 10 milliseconds means you are just paying Gas fees for someone else's success.
Holding the mouse and watching the continuously scrolling logs in the background, I deeply realize that the charm of Web3 is not in gambling-like predictions, but in how you can find that moment of certainty belonging to you through logic and code in the inevitable loopholes of the system.
This article is a personal independent analysis and does not constitute investment advice.
