Evidence from Arrokoth and comets strongly suggests a very low density for this and similar small Kuiper belt objects. Plausible compositions imply very high porosities, in excess of 70%, and low compaction crush strengths. If so, craters on Arrokoth (especially Sky, its largest) formed largely by compaction of pore space and material displacement. This is consistent with geological evidence from New Horizons imaging. High porosity reduces cratering efficiency in the gravity regime whereas compaction moves it towards a crush strength scaling. Compaction also guarantees that most impactor kinetic energy is taken up as waste heat near the impact point, with momentum transferred to the rest of the body by elastic waves only. Monte Carlo simulations of Sky-forming conditions indicate that the momentum imparted likely separated Arrokoth’s two lobes, but displacement was limited by dissipation at the neck. Unusual strength properties are not required to preserve Arrokoth’s bilobate configuration.