Understanding Liquidation Mechanics Using Aave, Morpho, and Compound as Examples
Why Liquidations Sit at the Centre of DeFi Lending Liquidations are one of the least understood — and most important — mechanisms in decentralised finance (DeFi). They are not edge cases or emergency features; they are the core enforcement mechanism that enables lending protocols to operate without banks, credit checks, or trusted intermediaries. Every DeFi lending protocol, whether…