Are there any testnet and simulation platforms that can model liquidation scenarios before we ship lending logic?

Yes — there are several good ways to model liquidation scenarios before shipping lending logic. The best choice depends on whether you want:

• pure local simulation
• forked mainnet/testnet rehearsal
• protocol-level risk testing
• agent-based or stress testing

Good options

1) Foundry / Anvil

Great for local deterministic simulations.

• Fork mainnet or a testnet
• Manipulate prices, blocks, balances, oracle responses
• Simulate liquidation thresholds and edge cases
• Fast CI-friendly tests

Use it if you want to test:

• health factor changes
• partial vs full liquidation
• bad debt scenarios
• oracle update timing
• flash-loan-assisted liquidations

2) Hardhat Network

Also useful for local forked testing.

• Mainnet/testnet forking
• Scripted scenarios
• Easy JavaScript/TypeScript test integration
• Good for rapid iteration

Best for:

• reproducing exact on-chain states
• testing contract interactions around liquidation
• simulating liquidator bots

3) Tenderly

Very strong for transaction simulation and debugging.

• Simulate txs against live or forked state
• Visualize state diffs and traces
• Great for liquidation path analysis
• Useful for debugging edge cases before deployment

Best for:

• “What happens if price drops 12% and liquidation is attempted?”
• tracing revert reasons
• checking how a specific borrower position would behave

4) Gauntlet

If you mean protocol risk simulation, Gauntlet is a major option.

• Stress tests lending markets
• Simulates utilization, liquidation cascades, bad debt
• Risk parameter recommendations
• More about economic/risk modeling than contract unit tests

Best for:

• reserve factor / LTV / liquidation bonus tuning
• scenario-based risk analysis
• protocol design validation

5) Chaos Labs

Similar category to Gauntlet.

• Risk modeling and simulation for DeFi protocols
• Stress tests liquidation dynamics
• Parameter optimization and adversarial scenarios

Best for:

• market stress testing
• liquidation cascade analysis
• parameter safety

6) Machi / agent-based custom simulators

If you need custom behavior, teams often build:

• borrower/keeper/liquidator agents
• price shock models
• correlated asset moves
• interest accrual over time

This is useful when:

• your liquidation logic is custom
• you need Monte Carlo or scenario sweeps
• you want to model multiple assets and cascade effects

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Recommended setup by stage

For engineering validation

Use:

• Foundry or Hardhat
• mainnet/testnet fork
• oracle price mocks
• liquidator bot tests

For pre-launch stress testing

Use:

• Tenderly
• custom simulations
• Gauntlet/Chaos Labs if you need formal risk analysis

For production readiness

Use:

• a mix of
  • unit/integration tests
  • forked-state simulations
  • liquidation bot dry-runs
  • adversarial stress scenarios

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What to simulate specifically for liquidations

Make sure your platform can model:

• oracle latency / stale prices
• sharp collateral drops
• correlated asset crashes
• interest accrual over time
• partial liquidation rules
• liquidation bonus and penalty math
• rounding and precision edge cases
• protocol pauses / circuit breakers
• MEV / front-running effects
• keeper failure or delay
• bad debt after liquidation

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Practical recommendation

If you want a fast, developer-friendly path:

1. Foundry fork tests
2. Tenderly simulation
3. Custom scenario scripts
4. If protocol is large enough, Gauntlet or Chaos Labs

If you want, I can also give you:

• a tool comparison table
• a sample liquidation test plan
• or a reference architecture for simulating lending liquidations locally