Before we dive in, here’s a quick intro to liquidations on lending protocols.
Liquidations on a lending protocol happen when a borrower’s collateral value drops too low, causing the protocol to sell the collateral to repay the loan. This ensures that lenders get their money back even if the collateral loses value. Third parties, such as searchers/bots, are incentivized to perform liquidations. Searchers compete with each other and bribe block build
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Didn't BProtocol build a solution with the liquidity backstop pools, back in 2021/22 ? They also partnered with RookDAO to devise a mechanism. Never got any adoption though.
Yeah. GTM for such solutions is pretty hard because
If you don't have your own Oracle, it is difficult to maintain control over the solution, given that an Oracle price is what is being auctioned off.
You'd need to have an accumulated reputation with lending protocols for them to trust you with a super important component of their protocol.
So unless you are an established Oracle or a service provider with good reputation, it is hard to bag partnerships with dominant lending protocols, i.e. where all the liquidations happen.