MEV searchers will compete to determine which borrowers can be liquidated and collect the liquidation fee for themselves
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What Is MEV, aka Maximal Extractable Value?
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Liquidation competition during market downturns intensifies systemic risk, as MEV searchers rush to seize undercollateralized assets, accelerating volatility.
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Liquidation-based MEV involves bots identifying undercollateralized loans on decentralized finance platforms and rapidly executing transactions to seize collateral and earn liquidation bonuses.
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