A few things to remember about on-chain liquidations:
1) In Compound V3, liquidation happens in two steps: the protocol first takes over an account eligible for liquidation, then sells its collateral to buyers at a discount.
2) In Aave, for example, once a position’s health factor falls below 1, any address can act as a liquidator and execute the liquidation.
3) Repaying debt or adding collateral proactively generally results in smaller losses than waiting to be liquidated, since liquidation incurs an additional penalty.
$COMP is the governance token of the lending protocol Compound.
#COMP
In highly volatile markets, manage your risk first.
1) In Compound V3, liquidation happens in two steps: the protocol first takes over an account eligible for liquidation, then sells its collateral to buyers at a discount.
2) In Aave, for example, once a position’s health factor falls below 1, any address can act as a liquidator and execute the liquidation.
3) Repaying debt or adding collateral proactively generally results in smaller losses than waiting to be liquidated, since liquidation incurs an additional penalty.
$COMP is the governance token of the lending protocol Compound.
#COMP
In highly volatile markets, manage your risk first.