What Is the Role of a ‘Circuit Breaker’ in a Decentralized Exchange?

A circuit breaker is an automated mechanism designed to temporarily halt trading or liquidation events when extreme volatility or a massive, sudden price deviation is detected, often triggered by a faulty oracle or market manipulation. Its role is to provide a cooling-off period, prevent cascading liquidations, and allow the oracle system or network to correct the erroneous data before further damage is done to the protocol's solvency.