Background

The concept of ALA was conceived by Canza Finance after recognizing a major gap in the accessibility and efficiency of collateral liquidation for retail investors and institutions. In the traditional DeFi landscape, liquidations are often dominated by bots that benefit from swift execution, leading to network congestion and limited access for smaller investors. Canza Finance sought to create a system that would democratize liquidation participation, offering a fair and transparent approach. With the ALA mechanism, Canza Finance aims to facilitate a more robust and resilient ecosystem that can cater to global market needs while addressing the unique challenges faced by emerging market players.

Liquidation is essential for maintaining the stability and solvency of DeFi platforms. It allows protocols to convert under-collateralized assets into liquid funds. Traditionally, this process is governed by a first-come-first-serve model, which can result in inefficient liquidations and increased volatility. ALA shifts to an asynchronous model, introducing a sequential auction mechanism that processes bids based on pre-set percentage increments. This allows broader participation and better control over liquidation events.