Proposal overview
Liquidation Bonus Updates for eleven Aave V2 assets
Simple Summary
A proposal to reduce the liquidation bonus for eleven (11) Aave V2 assets.
Abstract
This proposal is an extension on the previous ARC for liquidation bonus updates and the corresponding AIP-34: Liquidation Bonus Updates that followed. Besides reserve factor changes, no risk parameter values have been updated since the launch of Aave V2. Gauntlet's simulations output initially targeted liquidation bonus values lower than we recommended. Over the past 10 days we have been able to monitor liquidator behavior and have reached higher confidence in further reductions.
Motivation
The updated liquidation bonuses fared very well since AIP execution on 2021-09-04. The liquidation bonus changes impacted about $7M USD worth of liquidations across 21 users. Despite small changes, a bit over $100k USD was saved for those users (mostly in WBTC and SUSHI). Additionally, no additional insolvencies were recorded after the 18% one day drop in ETH price.
Specification
| Current Liquidation_Bonus | Recommended Liquidation Bonus |
|---|---|
| WBTC (9%) | 7.5% |
| REN (9%) | 7.5% |
| BAT (9%) | 7.5% |
| YFI (12.5%) | 10% |
| MKR (10%) | 8% |
| ZRX (8%) | 7.5% |
| CRV (12.5%) | 10% |
| XSUSHI (12.5%) | 10% |
| AAVE (8%) | 7.5% |
| MANA (8%) | 7.5% |
| SNX (9%) | 7.5% |
Implementation
The proposal sets the liquidation bonuses by calling configureReserveAsCollateral on the LendingPoolConfigurator contract at 0x311Bb771e4F8952E6Da169b425E7e92d6Ac45756, using the address and parameters specific to each token.
Copyright
Copyright and related rights waived via CC0.
Your voting info
Voting results
YAE
425.21K
100.00%
NAY
0
0%
Executed on
Sep 24, 2021Required
425.21K
320.00K
Required
425.21K
80,000.00
16,000,000
Proposal details
Block
~ 20 Sep 2021, 08:31 pm
13264819
Block
~ 20 Sep 2021, 08:31 pm
13264819
24 Sep 2021, 08:49 pm
Nick Cannon (@inkymaze), Watson Fu (@wfu)