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Vitalik Proposes Removing Liquidations from DeFi

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Vitalik Buterin is challenging one of DeFi's most fundamental mechanisms: automatic liquidations. In a June 1 Ethereum Research post, he proposed building synthetic assets on options instead of collateralized debt, potentially eliminating forced liquidations during crashes. This could reduce systemic risk and volatility in DeFi protocols, but may also require rethinking risk management frameworks. The proposal aims to create more resilient financial infrastructure, though implementation challenges remain.

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