How Drift’s Risk Engine Protected 50% of Users from Liquidations

Last weekend, the crypto market experienced its sharpest drawdown with $20B liquidated. Drift’s risk engine held strong, processing $75M in liquidations and protecting 50% (~2,303) of at-risk users from liquidations with zero downtime.

Here’s how Drift’s systems responded under pressure:

1. At peak volatility, 4,608 users were at risk of liquidation. Through flash-crash protection and Oracle guardrails, over 50% (2,303 users) were protected from being instantly liquidated. When prices deviate sharply from the 5-minute time-weighted average price (TWAP), Drift slows down liquidations. These few seconds of delay make a big difference to users amidst high volatility.

2. Drift has one of the largest Insurance Fund to Open Interest ratios (1:10) across all Perp DEXes, with $50m to support $500m+ in open interest. The Insurance Fund gives a huge buffer for the protocol to support bad debt/bankruptcies. With $600K to the Insurance Fund, depositors in exchange for providing liquidity to the fund.

Overall, all uncovered payments were absorbed by Drift’s Insurance Fund and vAMM fee pools, with no socialised losses to users.

A top trader on Drift even shared his firsthand experience during the crash:

Learn more about Drift’s liquidation engine in our docs.

Stay safe, and keep trading on Drift.