Curve Soft Liquidation Mechanism Keeps Hundreds of Loans Alive for Weeks

According to CoinDesk, data from Curve Finance shows its lending market recorded 704 "soft liquidation" events involving 602 borrower addresses, with a median duration of 14.5 days, a quarter of events lasting at least 38.9 days, and some positions remaining in the liquidation zone for months. 476 events originated in the first half of 2026. Unlike traditional lending protocols such as Aave and Curve's LLAMMA system does not sell collateral in one go after the price breaches a threshold, but gradually converts collateral into borrowed assets within a price range; if the price recovers, part or all of the conversion can be reversed. This means borrowers are not in a grace period, as their collateral is partially liquidated during the loan's lifetime, but they still have the chance to restore positions when the price reverses. Data also shows borrowers may incur losses from transaction fees, conversion, rebalancing, interest, and two-way price volatility; if the market remains unfavorable, positions may still fall into hard liquidation. Curve focuses on stablecoin and crvUSD lending, currently holding approximately $1.35 billion in deposits, with a 30-day DEX trading volume of about $3.4 billion and active loans of roughly $46 million.

[ChainCatcher]