It has been buzzing on social media for a while, with everyone discussing how ListaDAO's vault utilization rate hit 99% and triggered forced liquidation. Seeing the word "liquidation," many people's first reaction is to tense up—could there be a problem with the project? My friends were eager to ask if I needed to withdraw immediately, but I relaxed instead. I told them: this is not a bad thing; it indicates that the system is functioning normally and is self-correcting.

Imagine a fire alarm in a high-end office building suddenly screaming. Most people would panic, thinking there's a fire. But the truth is often that someone in the corridor smoked, triggering a sensitive sensor, which immediately activates smoke extraction and sprinkler systems, snuffing out a small hidden danger before it grows. ListaDAO's liquidation event follows this logic. Market fluctuations cause a few high-leverage positions to hit the liquidation line, and on-chain contracts execute instantly. Liquidators step in to take over, and the whole process is completed within minutes. This is not a system failure; rather, it is the carefully designed risk management mechanism working as intended.

Many people haven't fully understood how DeFi protocols make money. Let me list Lista's dual revenue model: the first is the stable fee from users borrowing lisUSD, and the second is the premium generated during liquidation events. The second part is particularly interesting—it doesn't profit from users' losses but rather represents the system bearing risk for the entire ecosystem and maintaining stability through the exchange of value. The more volatile the market, the more the value of this automated risk control system is highlighted. Therefore, the protocol's income is not an illusion but rooted in real market demand.