Gas Cost Pass-Through

Gas Cost Pass-Through is the mechanism of incorporating the transaction costs of liquidation into the fee structure charged to the borrower. Because liquidations are triggered by independent actors, these actors must pay gas fees to the network.

If these costs are not covered, liquidators would lose money, preventing them from acting. By allowing liquidators to recoup these costs through a portion of the liquidation penalty, the protocol ensures that liquidations are always economically viable.

This mechanism protects the protocol from becoming stuck with bad debt due to high network fees. It is a critical detail in the operational design of decentralized lending.

Proper implementation ensures that the liquidation process is frictionless and reliable regardless of network congestion.