Why Is Using Only the Spot Price for Liquidation in Perpetual Futures Considered Risky?

Using only the spot price for liquidation in perpetual futures is risky because the spot price on a single exchange is highly susceptible to sudden, temporary price swings and manipulation, especially via flash loans. A brief, artificial price spike could trigger unfair liquidations of leveraged positions, even if the underlying market health is sound.

This can lead to significant user losses and destabilize the derivatives protocol.