Aave will update its liquidation engine in V4, introducing optimizations such as dynamic liquidation thresholds and an automated auction mechanism.

According to ChainCatcher, Aave's official account posted on X stating that since its inception, Aave has processed nearly 295,000 liquidations, totaling over $3.3 billion. These liquidations protect the protocol from bad debt and maintain system health. In light of this, based on the V3 liquidation mechanism, Aave V4 introduces a redesigned and optimized liquidation mechanism.

The main advantages include: 1. The introduction of dynamic liquidation thresholds and an automated auction mechanism, reducing manual intervention and improving liquidation speed and capital efficiency; 2. By integrating on-chain oracles and MEV (Miner Extractable Value) protection, slippage and manipulation risks during the liquidation process are reduced; 3. Support for partial liquidation and batch processing, allowing borrowers to avoid full liquidation at a lower cost.