In the fast-paced world of Solana DeFi, lending protocols are constantly evolving to offer better user experiences while managing risks. A recent discussion on X (formerly Twitter) sparked by a post from @_brizal and countered by @y2kappa from Kamino Finance highlights the nuances of partial liquidations. Let's break it down in simple terms and see why not all partial liquidations are created equal.

The conversation started with a post praising the partial liquidation mechanics on @jup_lend and @0xfluid. The claim was that these platforms only close the minimal amount needed to bring a position back to health, with fees as low as 0.1%. It positioned this as a more user-friendly approach compared to others that might liquidate 20% or more.

But Marius from Kamino Finance, under the handle @y2kappa, pushed back hard. He called the narrative "mathematically, statistically, and financially illiterate." Why? Because minimal liquidations that just nudge you back to the liquidation threshold aren't necessarily optimal. They might seem borrower-friendly at first glance, but in volatile crypto markets, they can lead to worse outcomes.

He posed three rhetorical questions: What's the chance this is groundbreaking tech no one thought of? Or that it was dismissed years ago for good reasons? Or just hype? The point is, DeFi lending involves balancing borrower protection with lender safety and overall protocol stability.

For a deeper dive, Marius linked to his own detailed explanation. Here's the crux: The ideal amount to liquidate—known as the close factor—isn't fixed. It depends on how the market moves after the liquidation starts.

Consider two scenarios:

• If the market keeps dropping, a larger close factor (like 10%) is better. You sell more collateral early at higher prices, reducing losses.

• If the market rebounds quickly, smaller liquidations win because you avoid selling too much on the dip.

The catch? You can't predict the market's path. Crypto volatility means every dip is unique, so relying on historical data alone won't cut it. Too small a close factor risks "death by a thousand cuts"—repeated tiny liquidations that erode your position as prices fall. Too large, and you might over-liquidate if prices bounce back.

Kamino Finance opts for a 10% close factor in most markets as a sweet spot. This balances borrower experience with protecting lenders and the protocol from excessive risk. They've also slashed liquidation penalties by 90%, starting as low as 0.1%, making borrowing smoother on Solana.

This thread underscores a key lesson in DeFi: Nuance matters. Simple claims often overlook the complexities of risk management. As Solana's ecosystem grows, with meme tokens and other assets in play, understanding these mechanics helps users borrow smarter and avoid pitfalls.

Replies to the thread echoed the sentiment. One from @KaminoFinance itself was "bearish on financial illiteracy. bullish on kamino." Another user accused competitors of copying configs without grasping the full picture. It's a reminder that in DeFi, education and balanced innovation drive progress.

If you're into Solana lending, check out Kamino Finance for their updated soft liquidation system. And for more insights on DeFi trends that could impact meme token strategies, stay tuned to Meme Insider.