TL;DR: WOOF! is launching a snapshot vote to implement partial liquidations for Compound v3, allowing liquidators to restore account health without fully liquidating positions. This enhances capital efficiency for borrowers and broadens liquidator participation.
Link to RFC: [RFC] Partial Liquidations - Protocol Development - Compound Community Forum
Introduction
Greetings Compound community!
We’re excited to announce our upcoming snapshot vote for implementing partial liquidations in Compound v3. Current liquidations often result in users losing their entire collateral position, even when only a small portion needs to be liquidated to restore account health. This creates unnecessary capital inefficiency and limits liquidator participation to those with substantial capital reserves.
Partial liquidations represent a significant step forward for the protocol, enabling:
- Better user experience: Borrowers maintain more of their positions during liquidation events
- Increased liquidator participation: More opportunities to keep positions healthy
- Enhanced protocol stability: More granular liquidations help prevent cascade liquidation scenarios
- Capital efficiency: Positions remain active longer, generating more interest revenue
This implementation builds directly on our RFC: Partial Liquidations that received valuable community feedback.
Implementation Scope
Our development scope encompasses the core infrastructure needed to support partial liquidations while maintaining full compatibility with existing liquidation mechanisms:
Core Smart Contract Development
- Enhanced Comet Protocol: Implementation of
absorbPartial()function with configurable target health factor calculations - Safety Mechanisms: Ensure that the solution corresponds to high security standards and does not violate bad debt protection and reentrancy safeguards
- Multi-Collateral Support: Flexible collateral ordering system allowing liquidators to specify asset preferences
- Gas Optimization: Solution built to minimize gas costs during liquidation events
- OnChain Liquidator Adaptation: Modification of Compound’s existing Liquidator contract to support partial liquidation flows
Comprehensive Testing & Integration
- Advanced Scenario Testing: Multi-collateral liquidation scenarios, edge case validation, and stress testing under high volatility conditions
- Integration Validation: Full compatibility testing with existing liquidation infrastructure and oracle systems
- Performance Benchmarking: Gas consumption analysis and liquidation efficiency metrics
- Fuzzy testing: Implementation of invariants’ testing to ensure a high security level of the solution
Developer & Community Resources
- Technical Documentation: Complete integration guides, with reference of new view methods, and instructions for liquidators
- Reference Implementations: Code examples and best practices for partial liquidation integration
- Community Support: Ongoing technical guidance during the implementation phase
Timeline & Next Steps
We anticipate the complete implementation will require approximately 8 weeks from development commencement, structured across systematic development phases with built-in quality assurance checkpoints.
Immediate Actions:
- Snapshot Vote Launch: Community voting on implementation approval
- Development Kickoff: Upon successful vote, commencement of core development work
The implementation will maintain our commitment to the highest security standards with testing and community transparency via dev updates throughout the development process.
Community Participation
This proposal represents our in-depth technical research, community feedback integration, and careful protocol design. We encourage all community members to review the detailed RFC and participate in the upcoming snapshot vote.
Questions? Feel free to engage with our team here in the forum. We’re committed to addressing any technical concerns and ensuring community confidence in this important protocol enhancement.
Stay tuned for snapshot voting details - we’ll announce the official voting period shortly. Together, we’re building a more efficient and accessible liquidation system for the entire Compound ecosystem!
WOOF! Team 