Let’s talk about on-chain liquidations.
In Compound V3, liquidation happens in two steps: the protocol first absorbs accounts that meet the liquidation criteria, then sells their collateral to buyers at a discount.
One thing many people overlook: liquidation rewards are paid to incentivize off-chain liquidators to promptly liquidate risky positions and prevent the protocol from accumulating bad debt.
The more volatile the collateral, the higher the health factor should be kept, so there’s time to act during a sudden drop.
$COMP is the governance token of the lending protocol Compound.
#COMP
In Compound V3, liquidation happens in two steps: the protocol first absorbs accounts that meet the liquidation criteria, then sells their collateral to buyers at a discount.
One thing many people overlook: liquidation rewards are paid to incentivize off-chain liquidators to promptly liquidate risky positions and prevent the protocol from accumulating bad debt.
The more volatile the collateral, the higher the health factor should be kept, so there’s time to act during a sudden drop.
$COMP is the governance token of the lending protocol Compound.
#COMP