The Curve soft liquidation mechanism allows hundreds of loans to survive in a liquidation state for several weeks

According to CoinDesk, data from Curve Finance shows that its lending market has recorded a total of 704 "soft liquidation" events, involving 602 borrower addresses, with a median duration of 14.5 days, of which a quarter lasted at least 38.9 days, and some positions remained within the liquidation range for several months. Of these soft liquidations, 476 began in the first half of 2026. Unlike traditional lending protocols such as Aave and Compound, Curve's LLAMMA system does not sell off collateral all at once after the price drops below a threshold, but gradually converts collateral into borrowed assets within a price range. If the price rebounds before the loan completely fails, some or all of the conversions may be reversed. This means that borrowers are not in a grace period; their collateral has been partially liquidated during the loan's duration, but they still have the opportunity to restore their positions if the price reverses. However, soft liquidations are not without costs. Data shows that borrowers may still incur losses due to transaction fees, conversions, rebalancing, interest, and bid-ask price fluctuations, and if the market remains unfavorable, positions may still fall into hard liquidation. Curve Finance is a mainstream DeFi protocol focused on stablecoin exchanges and crvUSD lending, currently holding approximately $1.35 billion in deposits, with a DEX trading volume of about $3.4 billion over the past 30 days and active loans of about $46 million.