Day August 16, 2026

Liquidation Bonus vs Penalty in DeFi: Who Pays?

Liquidation Bonus vs Penalty in DeFi: Who Pays?

Liquidation bonus and liquidation penalty title two reverse methods DeFi protocols pay for the work of liquidating dangerous loans. In a bonus mannequin, the liquidator receives further collateral as a reward for repaying debt. In a penalty mannequin, the borrower…