How Does a 'Circuit Breaker' Mechanism Function in a Decentralized Exchange? ▴ Learn

How Does a ‘Circuit Breaker’ Mechanism Function in a Decentralized Exchange?

A circuit breaker in a decentralized exchange (DEX) is a protective mechanism that automatically pauses trading or limits price movement if the price of an asset changes too rapidly within a short period. This is designed to prevent catastrophic losses and protect the protocol from extreme market volatility, oracle manipulation, or flash-crash events.

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