Introducing Solvency Engine 1.5: Smarter Liquidations
At the core of Minterest’s design is the Solvency Engine (SE), a mechanism built to protect protocol stability while prioritising user portfolio health over profit-driven liquidations. Today, we’re introducing Solvency Engine 1.5, an upgrade that increases flexibility and expands Minterest’s ability to operate across multiple blockchain ecosystems.
Introducing Semi-Automatic Liquidations
All other lending protocols rely on third-party liquidators who profit from liquidating users’ positions as aggressively as possible. Minterest’s Solvency Engine is different—it prioritises keeping users in a position of financial health rather than allowing liquidators to extract value from them.
Previously, the Solvency Engine required DEX aggregators to execute liquidations, limiting operations to chains where these aggregators were available. Solvency Engine 1.5 removes this constraint by introducing semi-automatic liquidations, using Minterest’s internal reserve pools instead of external DEX swaps.
With semi-automatic liquidations, insolvent positions can be liquidated without relying on external aggregators. This gives Minterest more control over the process, reducing exposure to market volatility, increasing efficiency, and enabling greater blockchain compatibility.
Unlocking Multi-Chain Expansions
By reducing reliance on external DEXs, Solvency Engine 1.5 allows Minterest to expand to blockchain networks with limited liquidity infrastructure. This makes it easier to integrate with a wider range of chains while maintaining security and efficiency.
How Solvency Engine 1.5 Works
The Solvency Engine continuously monitors user loan positions for solvency. When an account becomes insolvent, it initiates liquidation using one of two automated methods:
- Full-Automation (DEX Aggregator-Based): Seizes collateral, swaps it via a DEX aggregator, and repays the debt in a single transaction.
- Semi-Automatic Liquidation (Reserve Pool-Based): Uses Minterest’s internal reserve pools to directly repay the loan, eliminating exposure to external DEX liquidity conditions.
By introducing semi-automatic liquidation, Minterest removes external dependencies while ensuring liquidations are executed fairly and efficiently.
Risk Management & Efficiency
Solvency Engine 1.5 is designed to improve the liquidation process by reducing external risks and ensuring users have a more stable borrowing experience. This is achieved through:
Greater Stability: Semi-automatic liquidation reduces exposure to market volatility, slippage, and excessive gas fees by leveraging internal reserves rather than external DEX swaps.
Optimised Liquidation Pathways: Minterest always selects the most efficient liquidation method, minimising disruptions and preserving user portfolio health.
Why This Matters
Solvency Engine 1.5 further separates Minterest from traditional lending protocols by ensuring liquidations serve as a tool for stability, not profit extraction. With semi-automatic liquidations and no reliance on external aggregators, the system is more adaptable, scalable, and capable of operating across multiple chains.
At the core of Minterest’s design is the Solvency Engine (SE), a mechanism built to protect protocol stability while prioritising user portfolio health over profit-driven liquidations. Today, we’re introducing Solvency Engine 1.5, an upgrade that increases flexibility and expands Minterest’s ability to operate across multiple blockchain ecosystems.
Introducing Semi-Automatic Liquidations
All other lending protocols rely on third-party liquidators who profit from liquidating users’ positions as aggressively as possible. Minterest’s Solvency Engine is different—it prioritises keeping users in a position of financial health rather than allowing liquidators to extract value from them.
Previously, the Solvency Engine required DEX aggregators to execute liquidations, limiting operations to chains where these aggregators were available. Solvency Engine 1.5 removes this constraint by introducing semi-automatic liquidations, using Minterest’s internal reserve pools instead of external DEX swaps.
With semi-automatic liquidations, insolvent positions can be liquidated without relying on external aggregators. This gives Minterest more control over the process, reducing exposure to market volatility, increasing efficiency, and enabling greater blockchain compatibility.
Unlocking Multi-Chain Expansions
By reducing reliance on external DEXs, Solvency Engine 1.5 allows Minterest to expand to blockchain networks with limited liquidity infrastructure. This makes it easier to integrate with a wider range of chains while maintaining security and efficiency.
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11, February 2025
