What Is the Role of “Keepers” or Liquidator Bots in the DeFi Ecosystem?

Keepers, or liquidator bots, are automated scripts that constantly monitor DeFi protocols for specific on-chain conditions that require an action to be taken. Their most critical role is in liquidations.

These bots monitor loan collateralization ratios on lending platforms. As soon as a loan becomes undercollateralized, a keeper bot will execute a transaction to repay the debt and claim the discounted collateral.

They are essential for maintaining the solvency of DeFi protocols, acting as the decentralized enforcement mechanism that ensures bad debt is removed from the system.