Let's talk about on-chain liquidations.
In Compound V3, liquidation happens in two steps: the protocol first takes over an account that meets the liquidation criteria, then sells its collateral to buyers at a discount.
One thing that's easy to overlook: being liquidated usually doesn't mean all your collateral is wiped out. The borrower still keeps the assets they borrowed; what's taken is the portion of collateral used to repay the debt, plus a liquidation penalty.
Repaying the debt yourself or adding more collateral is usually better than waiting to be liquidated, since liquidation comes with an extra penalty.
$COMP is the governance token of the lending protocol Compound. Currently 21.46.
In Compound V3, liquidation happens in two steps: the protocol first takes over an account that meets the liquidation criteria, then sells its collateral to buyers at a discount.
One thing that's easy to overlook: being liquidated usually doesn't mean all your collateral is wiped out. The borrower still keeps the assets they borrowed; what's taken is the portion of collateral used to repay the debt, plus a liquidation penalty.
Repaying the debt yourself or adding more collateral is usually better than waiting to be liquidated, since liquidation comes with an extra penalty.
$COMP is the governance token of the lending protocol Compound. Currently 21.46.