Liquidation Bonus Updates for eleven Aave V2 assets
A proposal to reduce the liquidation bonus for eleven (11) Aave V2 assets.
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.
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.
|Current Liquidation_Bonus||Recommended Liquidation Bonus|
The proposal sets the liquidation bonuses by calling
configureReserveAsCollateral on the
LendingPoolConfigurator contract at
0x311Bb771e4F8952E6Da169b425E7e92d6Ac45756, using the address and parameters specific to each token.
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