Prompt
Are there any testnet and simulation platforms that can model liquidation scenarios before we ship lending logic?
Latest observation
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
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
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
Practical recommendation
If you want a fast, developer-friendly path:
- Foundry fork tests
- Tenderly simulation
- Custom scenario scripts
- 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
Observation history
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