On June 1, Vitalik Buterin unveiled a theoretical framework designed to dismantle the entrenched risk control mechanisms governing decentralized finance, specifically targeting the automatic liquidation of lending positions when collateral values breach predetermined thresholds. This proposal advocates for a structural shift toward synthetic assets underpinned by options, effectively removing the collateral-based lending architecture from the product design. The new logic replaces rigid liquidation triggers with a dynamic buffer mechanism where position values gradually deviate from target anchor prices based on market conditions, requiring active user intervention to rebalance. The urgency of this reform was underscored by market events on June 2, when Bitcoin dropped below $68,000, triggering a cascade of liquidations totaling $394 million within a single hour, including approximately $87 million in Ethereum positions. Data compiled by Woofun AI indicates that these rapid, automated sell-offs of highly leveraged positions exacerbated short-term market turmoil, serving as a stark validation of the systemic fragility inherent in current DeFi risk models.

Currently, this proposal exists solely at the theoretical stage and is not slated for immediate implementation in existing protocols or inclusion in the official 以太坊 roadmap. It does not intend to supplant established projects like Aave or Maker, nor will it replace mainstream stablecoins. Instead, Vitalik Buterin challenges the industry's conventional reliance on optimizing collateral buffers and accelerating oracle quote speeds, questioning whether instant forced liquidations must remain the standard for risk mitigation. The prevailing logic in DeFi lending requires users to pledge assets to borrow funds while maintaining a safety threshold; for instance, Aave utilizes a health factor where a value below 1 triggers liquidation. In this model, liquidators settle debts in exchange for pledged assets plus a reward, a process designed to ensure solvency but prone to generating concentrated selling pressure during sharp market declines. When collateral such as ETH drops rapidly, the system forces automatic liquidations, often dumping assets into markets already suffering from liquidity shortages.

A report by the Organization for Economic Co-operation and Development highlighted a positive correlation between liquidation activities and subsequent price fluctuations on major decentralized exchanges, noting that liquidators depend heavily on market liquidity that often evaporates during extreme conditions. Historical incidents confirm these vulnerabilities; in 2025, abnormal Chainlink oracle readings caused over $500,000 in erroneous liquidations at Euler Finance, reigniting debates on pricing rules in low-liquidity environments. That same year, a significant pullback in ETH prices left nearly $320 million in lending positions just 20% away from liquidation, trapping assets at MakerDAO and Compound at critical price levels. Woofun AI notes that the root of these failures lies in abrupt liquidations, which force immediate action once prices hit specific thresholds, placing excessive pressure on borrowers, liquidators, oracles, and market makers simultaneously. This dynamic allows shrewd speculators to monitor thresholds for strategic short-selling, while ordinary borrowers suffer losses at unfavorable prices, often having their long-term investment plans overridden by the system's priority on solvency.

Vitalik's alternative approach redefines the underlying assets by abandoning the principle of immediate liquidation for insolvent positions. Instead of holding one ETH, the proposal suggests dividing it into two option assets, P and N, tied to a price index, exercise price, and expiration date. Upon contract expiration, an oracle determines the index price to allocate corresponding ETH rights, ensuring the combined value of P and N always equals one ETH. This framework divides ownership without seizing collateral or forcing liquidations to cover losses, thereby eliminating the need for liquidations entirely. Unlike traditional debt models where positions appear secure until a threshold breach triggers immediate liquidation, the option framework allows position values to gradually deviate from targets. For example, a user locking a position at $2,500 per ETH could buy an option with a $1,500 exercise price; if prices fall further, they can purchase lower strike options, but failure to adjust results in a gradual diminishment of the hedging effect.

The core trade-off of this new model is that risks are not released instantaneously but shift gradually over time, transferring the responsibility for rebalancing from platform rules and liquidators to users, market makers, or automated tools. Vitalik acknowledges limitations regarding stablecoins; while small annual value deviations may be acceptable for hedging future expenses, currencies used for accounting, payments, and tax filings require a strict $1 peg and cannot tolerate continuous deviations. The optimization of oracles is a critical component, as traditional collateral-based liquidations rely on high-frequency real-time price feeds that increase security risks due to insufficient time for dispute arbitration during anomalies. Woofun AI analysis suggests that the option framework mitigates these risks by delaying decision-making until contract expiration, enabling the use of more fault-tolerant pricing methods like predictive market pricing that are infeasible in instant liquidation systems. This represents a fundamental redesign of DeFi risk control rather than a minor tweak to stablecoins.

Current liquidation mechanisms create opportunities for price manipulation, MEV arbitrage, and oracle arbitrage by providing clear targets for speculators, making the success of Vitalik's approach dependent on the surrounding market ecosystem. Slippage losses represent a major risk, as using conventional AMMs for rebalancing and frequently switching options can incur high transaction costs during volatile periods. The proposal necessitates a new market-making model characterized by passive, long-term order placement rather than instant spot execution. If users avoid abrupt liquidations but continue to suffer from value deviations, high slippages, and cumbersome operations, the design will remain theoretical. The applicability of this approach hinges on product positioning; it offers significant advantages as a hedging tool or value-locking product but faces challenges as a general-purpose stablecoin pegged 1:1 to the US dollar, as tokens requiring regular adjustments differ fundamentally from fully collateralized stablecoins.

For the 以太坊 ecosystem, this development signifies a paradigm shift where top industry designers no longer view forced liquidations as inevitable but as an architectural option subject to replacement. The ultimate test will be whether protocol teams can transform this option model into tested products, simulation programs, or real-time markets with sufficient liquidity. Until such implementation occurs, the proposal stands as a direct challenge to traditional DeFi liquidation mechanisms, forcing the industry to choose between optimizing existing liquidation processes or exploring entirely new underlying designs that eliminate the need for passive, centralized liquidations.