For many users, liquidation doesn’t feel like a design flaw. It feels like a shock.

A position rarely collapses out of nowhere. It weakens first. Health factor drops. Buffers thin out. Prices move against you. Then one transaction closes everything. That disconnect or sudden enforcement is what soft liquidation is trying to fix.

Hard liquidation activates at a single number. Cross it, and the protocol acts. Everything resolves at once. But positions don’t deteriorate in a single block. They send signals along the way. Health factor compresses. Volatility eats into margins. Risk builds gradually.

Soft liquidation responds to those signals instead of waiting for collapse. The idea is simple: adjust while the position is still healthy enough to recover.

Automation Ahead of Liquidation

Many protection tools still revolve around speed. They monitor positions and react as liquidation approaches. In volatile markets, everyone tries to act at the same moment. Execution becomes competitive. Gas spikes. Outcomes depend on timing.

ReacDEFI, Reactive Network’s DApp, takes a different approach.

Instead of racing at the edge of liquidation, it activates earlier based on rules you define in advance. There is no scramble at the last second. Intervention happens before the position becomes critical.

Soft Liquidation

ReacDEFI’s soft liquidation is configured directly in the interface, to access simply connect a wallet with an open liquidity position.

Each element defines how and when your position is protected. Below is what each step does.

1. Protection Type

You choose how the system should intervene:

• Collateral Deposit: add more collateral when Health Factor drops
• Debt Repayment: repay part of the borrowed asset
• Both (Combined): use both methods

This determines how your position recovers once protection activates.

2. Trigger Health Factor

This is the activation threshold. If your current Health Factor is 1.29 and you set the trigger at 1.2, nothing happens while HF stays above 1.2. The moment HF drops below 1.2, protection activates automatically. The position is still solvent. The system steps in early.

3. Target Health Factor

This defines how far recovery goes. For example, if the target is 1.5, ReacDEFI adjusts your position until HF reaches 1.5 and then stops. It doesn’t close the position. It restores a buffer and exits.

4. Collateral Asset

If you selected Collateral Deposit (or Combined), this is the asset that will be added to your position when protection activates. You decide in advance where additional collateral comes from.

5. Debt Asset

If you selected Debt Repayment (or Combined), this is the asset that will be repaid when HF drops below your trigger. Again, the method is predefined. Nothing is improvised during market stress.

6. Check Frequency

This controls how often the system checks your Health Factor:

• Every block
• Every 10 blocks
• Every 100 blocks
• Every 1000 blocks
• Every 10,000 blocks

More frequent checks mean faster reaction. Less frequent checks reduce activity. You choose the balance.

7. Prefer Debt Repayment (Optional)

If using Combined Mode, this toggle lets you prioritize debt repayment before adding collateral. It gives you control over which side of the position adjusts first.

8. Enable Protection

Once everything is configured, you activate protection. From that point forward, ReacDEFI monitors your position automatically and executes according to the parameters you defined.

Recovery Options

ReacDEFI gives three protection modes:

• Collateral Deposit: add more collateral
• Debt Repayment: repay part of the borrowed asset
• Combined Mode: use both

Each mode changes what fields you configure and how the system restores your position. 

When you select Collateral Deposit, the system protects your position by adding more collateral once the Trigger Health Factor is breached.

When HF drops below your trigger, ReacDEFI automatically deposits the selected collateral asset until the position reaches your target HF. This increases your buffer without reducing your debt.

When you select Debt Repayment, protection works by repaying part of your borrowed asset.

Once HF falls below your trigger, ReacDEFI repays part of the selected debt asset until HF reaches your target. This reduces leverage directly by lowering outstanding debt.

What Changes

ReacDEFI doesn’t remove hard liquidation from the lending protocol underneath. If risk continues to rise and buffers are exhausted, liquidation can still happen.

What changes is the path leading there. Instead of waiting for a single irreversible moment, the system:

• Detects stress early
• Intervenes automatically
• Restores a defined buffer
• Continues monitoring

Liquidation becomes less likely to feel sudden.

Closing Thought

Markets move continuously. Risk builds continuously. Traditional liquidation does not as it acts at a single point.

Soft liquidation introduces continuity into that structure. In ReacDEFI, you decide when protection activates, how recovery happens, and how much safety margin is restored. The system executes those rules automatically, before the position reaches the edge.

Risk doesn’t disappear. But surprise does. Liquidation shifts from a last-second event to a managed process, one shaped by parameters you control in advance.

About Reactive Network

Reactive is an EVM-compatible execution layer for dApps built with Reactive contracts. These contracts differ from traditional smart contracts by using inversion-of-control for the transaction lifecycle, triggered by data flows across blockchains rather than by direct user input.

Reactive contracts listen for event logs from multiple chains and execute Solidity logic in response. They can determine autonomously when to transmit data to destination chains, enabling conditional cross-chain state changes. The network delivers fast and cost-effective computation via a proprietary parallelized EVM implementation.

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