An over-borrowing vector refers to a specific sequence of actions or a pattern of behavior within a decentralized lending protocol that leads to a user borrowing more assets than their collateral should safely permit. This can result from market manipulation, oracle exploits, or design flaws in the protocol’s liquidation mechanisms. It represents a potential vulnerability that could destabilize the lending pool. Such a vector can create systemic risk for the protocol.
Context
The identification and mitigation of over-borrowing vectors are crucial for maintaining the solvency and security of decentralized finance (DeFi) lending platforms. These vectors often emerge during periods of high market volatility or when external price feeds (oracles) are compromised. News reports frequently cover incidents where such vulnerabilities have been exploited, leading to significant losses for protocols and users. Developers constantly work to harden these systems against such attack patterns through rigorous auditing and protocol upgrades.
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