Curve Data Shows 704 Soft Liquidations Survived Market Swings for Weeks

Curve Finance recorded 704 instances of "soft liquidation" across 602 borrower addresses, with the median duration of these precarious positions lasting 14.5 days. The data, shared with CoinDesk, reveals that a significant portion of these loans survived market drawdowns for weeks—and in some cases months—without being closed out, fundamentally altering the definition of liquidation in decentralized finance.

Market Context

Curve Finance, a major protocol known for stablecoin swaps and crvUSD lending markets, currently holds approximately $1.35 billion in deposits according to DefiLlama. Its decentralized exchange processed roughly $3.4 billion in volume over the past 30 days, generating about $4.3 million in fees and $1.15 million in protocol revenue. With roughly $46 million of active loans outstanding, the protocol's liquidity mechanics are central to current DeFi trading strategies.

Analysis

Unlike conventional lenders such as Aave or Compound, which trigger an immediate sale of collateral once a predetermined price threshold is crossed, Curve employs a system called LLAMMA (Lending Liquidation AMM). This model replaces the single-point liquidation trigger with a price range. As collateral value falls through this range, the system gradually converts the collateral into the borrowed asset rather than closing the position outright. If market prices recover before the loan fails completely, the system can reverse some or all of the conversion. The data indicates that 476 of the 704 soft liquidation cases began during the first half of 2026, suggesting this mechanism has been tested extensively during recent volatility. However, this survival is not free; borrowers incur losses through trading fees, interest, rebalancing costs, and repeated price swings. A position can still face hard liquidation if prices continue to fall, and even with recovery, borrowers may not return to their initial financial position.

Key Numbers

- 704 total soft-liquidation instances recorded across 602 borrower addresses.

- Median duration of soft liquidation: 14.5 days.

- 25% of soft-liquidation loans lasted at least 38.9 days.

- 476 soft-liquidation cases initiated during the first half of 2026.

- Curve Finance total deposits: ~$1.35 billion.

- 30-day DEX volume: ~$3.4 billion.

- 30-day protocol fees: ~$4.3 million.

- 30-day protocol revenue: ~$1.15 million.

- Active loans outstanding: ~$46 million.

What to Watch

Traders should monitor the persistence of soft-liquidation positions, particularly those initiated during the first half of 2026, as their continued survival or eventual hard liquidation will signal the effectiveness of the LLAMMA model under sustained volatility. Key metrics to track include the median duration of these precarious loans and the volume of positions reversing from the liquidation price range back to safety. Additionally, the impact of accrued interest and trading fees on the net recovery value for borrowers remains a critical factor in assessing the true cost of this survival mechanism. Any significant shift in the ratio of soft versus hard liquidations could indicate changing market conditions or protocol adjustments.