How does $HUMA solve the liquidation pain points of traditional DeFi lending?

Traditional DeFi lending protocols (such as Compound) rely on over-collateralization and on-chain price oracles to trigger liquidations, facing pain points such as high collateral volatility, liquidation delays, and market manipulation risks. HUMA Finance reconstructs the liquidation logic through the following innovative mechanisms:

1. Real-world asset anchoring to reduce collateral volatility

HUMA uses real-world assets (RWA) such as corporate accounts receivable and salary flows as collateral, decoupling their value from the crypto market. For instance, the default rate of order income collateralized by cross-border e-commerce is only 1.2%, far lower than the high volatility of crypto assets.

2. Dynamic risk control and automatic repayment closure

Smart contracts automatically track the status of accounts receivable, prioritizing loan repayment after cash flow, creating a self-circulating liquidation model. If the borrower defaults, the SPV (special purpose vehicle) directly disposes of off-chain assets, avoiding liquidity crises from on-chain auctions.

3. Layered insurance and institutional collaboration

HUMA establishes a three-layer risk buffer pool:

• The first layer is over-collateralized by the borrower (usually 120%);

• The second layer shares some losses with liquidity providers (LPs);

• The bottom layer is covered by the protocol's insurance fund for extreme risks.

This design disperses liquidation shocks across the entire ecosystem, preventing a single event from triggering a systemic collapse.

Conclusion: HUMA converts liquidation risk from "passive response" to "active prevention" through the stability of RWA assets, smart contract automation, and layered risk control, providing a more sustainable solution for DeFi lending.#HumaFinance @Huma Finance 🟣