DeFi positions after a death

DeFi positions are the hardest category to inventory in an estate because they are not “a balance”, they are active relationships with protocols. Some continue, some accumulate, some can be liquidated. The executor’s job is to understand what exists before deciding anything. A DeFi position is largely determined by smart-contract logic. Whether and to what extent protocol administrators, governance, guardians or other roles can pause, modify or support it differs per protocol and contract configuration; check the current contract structure and official documentation of the protocol concerned.

Position types and what they mean

• Lending. Deposits in lending protocols: the estate owns a claim that can often be withdrawn normally by the account owner. But a lent or collateralised position can deteriorate with market moves, and automated liquidation can sell the collateral if nobody acts.
• Staking is not one technical model. When inventorying, distinguish between native/solo validator staking, staking-as-a-service, pooled or liquid staking and custodial staking at a platform. With native validator staking, validator-specific data may be relevant alongside normal wallet access, such as validator keystores or signing keys, withdrawal credentials or the withdrawal address, and node, provider or deposit information. With pooled or liquid staking, the position may instead be represented by tokens or protocol-specific contract state. So first establish which staking model was used before determining which recovery material or technical route is relevant.
• Liquidity provision. A liquidity position can, depending on the protocol and version, be represented by fungible LP tokens, an NFT/position token or another protocol-specific position. So when inventorying, do not only search for ‘LP tokens’. Record the protocol, the chain and the relevant position or contract data; where applicable also a token ID or position ID. Value, fees and withdrawal or exit rules differ per protocol.
• Yield/farming. Positions earning rewards: compounding may continue after death, which is good or bad depending on the position. Some rewards and airdrops are only claimable within a window.
• Governance. Some tokens or positions confer voting, proposal or delegation rights. Record which governance rights are attached to the position found; their practical and economic significance differs per protocol and token.

What can happen after a death

• Lending positions keep running: collateral can be liquidated automatically while the estate is still determining authority.
• Staking and lock-ups can be temporarily non-withdrawable. Which withdrawal, deactivation or other options exist is determined by the protocol concerned and the current position.
• Liquidity pools continue to accrue or fluctuate; withdrawing follows the protocol’s rules.
• Rewards and airdrops may accumulate, or expire if not claimed in time.

The estate problems DeFi creates

• Documentation is thin. Families rarely know these positions exist; the wallet may be the only trace.
• Liquidation risk. Some positions can be liquidated if health factors drop. Check time-sensitive risks as soon as possible: a DeFi position can be liquidated while it is still being determined who may act. That does not mean you have to execute transactions yourself right away. Record the risk and, in an urgent situation, ask for legal and technical advice as soon as possible about what can and cannot be done in your situation.
• Jargon hides value. Without protocol knowledge, a position can look worthless or priceless and be neither.
• No central customer service. There is often no party that can reverse an on-chain transaction; understand the current on-chain state and use the official documentation and other verifiable protocol information.

How to inventory safely

1. Identify the wallet(s) through the normal search (find crypto).
2. Read the chain, not the app. Balances and positions on public explorers are indications, record them, do not act on them.
3. Note every protocol and chain. DeFi spans chains; the inventory must say where each position lives.
4. Get qualified technical help for the inventory itself if needed, reading protocol state is a technical task, not a decision to hand over keys.

What not to try yourself

• Do not close or move positions before the authority situation is assessed.
• Do not endlessly log in or try passwords on protocols.
• Do not enter seed phrases on arbitrary websites.
• Do not pay anyone who claims they can “release” a position. The rules of a smart contract generally cannot be bypassed, but some contracts are upgradeable or have governance controls that can change them; anyone who claims to bypass them for an upfront payment is a warning sign.

When technical assessment is useful

When it is clear which positions are open but access is missing (or when it is unclear whether DeFi positions exist at all) a technical assessment can help. That is inventory and restoration work within a reviewed lawful framework; feasibility is determined per case.

DeFi does not change the golden rule: preserve, identify, establish authority, then act. Risks and deadlines may be checked and recorded before that time. It simply makes step two genuinely difficult; that is what this page addresses.