How Does a Decentralized Exchange (DEX) Handle Liquidation Rewards?

In a DEX, liquidation is often executed by external 'liquidators' or 'keepers' who are incentivized by a liquidation reward. This reward, typically a percentage of the liquidated collateral, is paid to the external party for executing the transaction and is designed to ensure liquidations are performed quickly and efficiently, even during network congestion.

What Is a ‘Liquidation Penalty’ and Its Purpose?
Explain the Role of ‘Keepers’ or ‘Liquidators’ in a DeFi Derivatives Protocol
Who Typically Participates in the Liquidation Auctions?
Why Is a Small Amount of Crypto Often Kept in Hot Storage by Institutional Custodians?
How Is the Liquidation Process Managed on a Decentralized Synthetic Futures Platform?
How Do Decentralized Exchanges Attempt to Avoid Both ADL and Socialized Loss?
How Can a “Pull” Model Introduce Potential Settlement Delays for Options Contracts?
How Does a Decentralized Exchange (DEX) Facilitate the Liquidation Process?

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