Based on lending market statistics, a large number of cryptocurrency loans on Curve Finance entered liquidation status and persisted there for weeks without being terminated.
This alters the actual definition of what it means to be liquidated. On standard borrowing protocols, breaching a specific price point triggers an immediate sale. Conversely, Curve measures the duration a borrower remains inside a designated "danger zone" to determine how collateral undergoes conversion and whether the debt position can successfully exit.
Figures provided to CoinDesk revealed 704 instances of soft liquidation spread across 602 distinct borrower addresses. The median duration reached 14.5 days, a quarter lasted at least 38.9 days, and select positions remained inside the liquidation band for multiple months. Among those, 476 started during the initial half of 2026.
This diverges from how traditional liquidations operate. A borrower deposits ether or another asset as collateral, its valuation drops past a predetermined threshold, and a portion of that backing gets sold to settle the debt. On platforms like Aave or Compound, whatever gets sold does not return even if asset prices rebound afterward.
Curve’s lending architecture, known as LLAMMA, trades that single trigger point for a continuous range. As the price of the collateral descends through it, the protocol progressively swaps the collateral for the borrowed asset instead of terminating the position instantly. If valuations recover before the loan collapses completely, part or all of those conversions can be reversed.
The unusual aspect is that these users were not simply lingering in a temporary grace period. Their collateral was actively undergoing conversion while the debt remained open, indicating a position could endure days or weeks in a partially liquidated state and still bounce back if market direction reversed.
Curve Finance stands as a prominent decentralized finance exchange and lending protocol renowned for stablecoin exchanges and its crvUSD borrowing markets. According to DefiLlama, it maintains approximately $1.35 billion in total value locked, whereas its decentralized marketplace handled roughly $3.4 billion in trading volume over the preceding month.
Curve generated about $4.3 million in fees and $1.15 million in protocol revenue during that timeframe, accompanied by approximately $46 million in outstanding active loans.
Nevertheless, soft liquidation is not without costs. The metrics demonstrate that users can still experience financial losses via trading fees, asset conversions, automated rebalancing, interest charges, and fluctuating prices moving in both directions.
A position can still transition into a hard liquidation if the market continues moving adversely. Even when asset valuations recover, the borrower might not finish in the exact financial standing they began with.
Consequently, Curve’s data proves that within this framework, entering liquidation does not signify that a loan is finished, and that hundreds of participants spent days or weeks within that precise condition.
Originally published at https://www.coindesk.com/tech/2026/09/08/hundreds-of-defi-loans-on-curve-stayed-in-liquidation-for-weeks-without-dying.
