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Proposal overview

Liquidation Bonus Updates for eleven Aave V2 assets

Executed

Executed on 

Sep 24, 2021

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_BonusRecommended 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

425,211

AAVE

100.00%

NAY

0

AAVE

0%

Top 10 addresses

Votes

State
Executed

Executed on 

Sep 24, 2021
Quorum
Reached
Current votes

Required

425.21K

320.00K

Differential
Reached
Current differential

Required

425.21K

80,000.00

Total voting power

16,000,000

Proposal details

Created

Block

20 Sep 2021, 20:31 UTC +00:00

13264819

Started

Block

20 Sep 2021, 20:31 UTC +00:00

13264819

Ended

Block

23 Sep 2021, 20:31 UTC +00:00

13284019

Executed

24 Sep 2021, 20:49 UTC +00:00

Author

Nick Cannon (@inkymaze), Watson Fu (@wfu)