Dual quaternion skinning
Blend the bones' transforms as dual quaternions instead of matrices, and the joint stops collapsing when it twists.
Ordinary vertex skinning (linear blend skinning) interpolates bone matrices component by component. That holds up until a joint twists hard — then the volume shrinks and the surface pinches like the twist in a sweet wrapper, the classic "candy-wrapper" artifact at shoulders and wrists.
Ladislav Kavan and colleagues showed in 2007 that representing each bone transform as a dual quaternion and blending those instead preserves the rotation correctly and keeps the volume. The cost is a little more arithmetic per vertex, but the result is clean enough that dual quaternion skinning now ships in most engines as an alternative to the linear method.