PredictLiquidate
Predicts DeFi position liquidation risk using Geometric Brownian Motion in a Next.js dashboard.
Project Description
🧮 Project: DeFi Liquidation Risk Dashboard Overview
The DeFi Liquidation Risk Dashboard helps users predict the probability of a leveraged DeFi position being liquidated over a chosen time horizon. It’s based on the model from the research paper “DeFi Liquidation Risk Modeling Using the Reflection Principle for Zero-Drift Brownian Motion”, where collateral prices are assumed to follow a Geometric Brownian Motion (GBM). By applying the reflection principle, the app computes the exact closed-form probability that an asset’s price crosses the liquidation threshold within a given time — without requiring any simulation or Monte Carlo estimation.
How it works
User Inputs
Current collateral price S0 S 0
Liquidation threshold Sliq S liq
Volatility σ σ (annualized or custom)
Time horizon t t (in days, hours, etc.)
Mathematical Model The app uses the GBM-based formula from the paper:
P(liquidation within t)=2 Φ (ln(Sliq/S0)σt) P(liquidation within t)=2Φ( σ t
How it's Made
🧮 Project: DeFi Liquidation Risk Dashboard Overview
The DeFi Liquidation Risk Dashboard helps users predict the probability of a leveraged DeFi position being liquidated over a chosen time horizon. It’s based on the model from the research paper “DeFi Liquidation Risk Modeling Using the Reflection Principle for Zero-Drift Brownian Motion”, where collateral prices are assumed to follow a Geometric Brownian Motion (GBM). By applying the reflection principle, the app computes the exact closed-form probability that an asset’s price crosses the liquidation threshold within a given time — without requiring any simulation or Monte Carlo estimation.
How it works
User Inputs
Current collateral price S0 S 0
Liquidation threshold Sliq S liq
Volatility σ σ (annualized or custom)
Time horizon t t (in days, hours, etc.)
Mathematical Model The app uses the GBM-based formula from the paper:
P(liquidation within t)=2 Φ (ln(Sliq/S0)σt) P(liquidation within t)=2Φ( σ t
