Liquidations are not a bug in DeFi lending. They are the design, and every one of them sells collateral into the same falling market that triggered it.
Deposit $10,000 of ETH into a lending protocol and borrow $6,000 of USDC against it. That feels conservative, since you are over 160% collateralized. At an 80% liquidation threshold, a 25% drop in ETH is all it takes to have your position sold out from under you by a bot.
β Educational, not financial advice.