Eric Parker from Pixelux and James O’Brien have just released their paper Real-Time Deformation and Fracture in a Game Environment. It's an interesting read, and reveals some of the details behind the impressive Pixelux engine. Basically they use tetrahedral finite elements and just make it look like it has more detail than the physics really has. Still, seems to work pretty well.
Of note from the demoscene world is h4vok by Archee which features fractures in 4k, nicely timed to music. Very impressive.
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