Hi guys trying to work out the maths behind how

Question

Hi guys trying to work out the maths behind how

aave works and when liquidations occur. If I have 29.87% borrow power left, does it mean that my borrowed asset can go up in usd value by 29.87% before I am at heavy risk of being liquidated? (Given that my collateral usd value remains the same). Pls help, thanks in advance

#aave #blockchain #cryptocurrency #english

0

23.12.2021

7 ответов

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FraxTrain Автор вопроса

h3lpfulBrother
This may help https://docs.aave.com/risk/asset-ri...

Sorry I am really struggling to work out what this means. I will write out how I have been calculating things to give me a rough idea of what’s safe and not safe to borrow and liquidations, pls let me know if super roughly this sounds about right

0

23.12.2021

FraxTrain Автор вопроса

h3lpfulBrother
This may help https://docs.aave.com/risk/asset-ri...

So if I borrow $3,025 worth of a volatile asset using $5,500 worth of collateral (1.52 health rating resulting), I get 83% liquidation threshold. I understand this liquidation threshold as my borrowed asset worth must become 83% of $5,500 for me to get liquidated = if my borrowed asset worth go from $3,025 to $4,565 (83% of my collateral usdc value at $5,500) I will get liquidated. Hence my borrowed asset’s value can go up from $3,025 to $4,565 or 50.9% before I get liquidated. Does applying this kind of logic/calculation sound about right to you or can you see some red flags? Thanks in advance ser🙏

0

23.12.2021

FraxTrain Автор вопроса

FraxTrain
So if I borrow $3,025 worth of a volatile asset us...

All this assuming the usd value of my collateral remains same

0

23.12.2021

h3lpfulBrother

FraxTrain
So if I borrow $3,025 worth of a volatile asset us...

Yes this is correct. If you are using USDC as collateral then you can borrow up to 80% of the value, and at 85% of the value your HF will be <1 and at risk of liquidation.

0

23.12.2021

FraxTrain Автор вопроса

FraxTrain
So if I borrow $3,025 worth of a volatile asset us...

Also just to clarify Re-borrowing and liquidations, if aave shows I have 27.14% borrow power left, it doesn’t mean that my collateral can go up by 27.14% before being at risk of liquidation right? Because applying this kind of logic to collateralising and liquidations means that my volatile borrowed asset can go up in value quite a lot less before I risk liquidation compared to when I go off by this logic

0

23.12.2021

h3lpfulBrother

FraxTrain
Also just to clarify Re-borrowing and liquidations...

Borrow power = Max LTV which is less than the liquidation threshold. For example you can borrow up to a max of 80% LTV but will be liquidated at 85% LTV

0

23.12.2021

h3lpfulBrother · Accepted Answer

h3lpfulBrother

This may help https://docs.aave.com/risk/asset-risk/risk-parameters#health-factor

0

23.12.2021

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Hi guys trying to work out the maths behind how

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