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Using #defi .. This may seem like a lot, but if you can get through this, it will open up a whole world of new #possibilities . Next - Don't get liquidated in Aave! Liquidation A liquidation is a process that occurs when a borrower's health factor goes below 1 due to their collateral value not properly covering their loan/debt value. This might happen when the collateral decreases in value or the borrowed debt increases in value against each other. This collateral vs loan value ratio is shown in the health factor. In a liquidation, up to 50% of a borrower's debt is repaid and that value + liquidation fee is taken from the collateral available, so after a liquidation that amount liquidated from your debt is repaid. How much is the liquidation penalty? The liquidation penalty (or bonus for liquidators) depends on the asset used as collateral. ex. 1 I deposited 10 ETH and borrowed 5 ETH worth of DAI. If my Health Factor drops below 1 my loan will be eligible for liquidation. A liquidator can repay up to 50% of a single borrowed amount = 2.5 ETH worth of DAI. In return, the liquidator can claim a single collateral which is ETH (5% bonus). The liquidator claims 2.5 + 0.125 ETH for repaying 2.5 ETH worth of DAI. ex. 2 I deposited 5 ETH and 4 ETH worth of YFI, and borrowed 5 ETH worth of DAI If my Health Factor drops below 1 my loan will be eligible for liquidation. A liquidator can repay up to 50% of a single borrowed amount = 2.5 ETH worth of DAI. In return, the liquidator can claim a single collateral, as the liquidation bonus is higher for YFI (15%) than ETH (5%) the liquidator chooses to claim YFI. The liquidator claims 2.5 + 0.375 ETH worth of YFI for repaying 2.5 ETH worth of DAI. How can I avoid getting liquidated? To avoid liquidation you can raise your health factor by depositing more collateral assets or repaying part of your loan. By default, repayments increase your health factor more than deposits. Also, it's important to monitor your health factor and keep it high to avoid a liquidation. Keeping your health factor over 2, for example, gives you more of a margin to avoid a liquidation. Staking Aave What is staking? Staking consists of depositing your AAVE tokens within the protocol . The purpose of staking is to act as a mitigation tool in case of a . As an incentive for this, Safety Module stakers will receive Safety Incentives. What is the risk of staking? In the case of a shortfall event, the Safety Module uses up to 30% of the assets locked to cover the deficit. What is the incentive for staking? Stakers within the Safety Module receive Safety Incentives. The initial SI rewards are 550 AAVE/day to be split between the stakers. The Safety Incentive's allocation quarterly date should be voted on before the end of the 3 months (90 days) distribution schedule. In the case of a late or no vote on a new SI allocation plan, the current allocation will continue until a vote or until the Aave Reserve is empty. How do I start staking? To stake you can head over to the 's Staking section. Over the staking section select 'stake', input the amount to stake and click on 'stake'. Then proceed to send 2 transactions to stake your AAVE: 1. Approve: This is a required transaction prior to the staking that allows the staking contract to move your AAVE tokens. This transaction won't be required if you perform additional staking actions unless you revoke the approval. 2. Stake AAVE: This transaction performs the action to stake AAVE tokens. When confirmed, your tokens will be staked in the Safety Module. How do I stop staking? If you want to stop staking, head over to the in the Staking section. Over the staking section select 'Unstake', input the amount and click on 'unstake'. If you did not activate the cooldown period, you will need to activate it. This consists of 1 transaction to activate the cooldown. When the cooldown period finishes, you will be able to unstake by following the next step. Unstake AAVE: This transaction performs the action to unstake AAVE tokens. When confirmed, your AAVE tokens will be back in your wallet. After the cooldown period passes there is a 2 day window to unstake! If you do not unstake during that period you will need to activate the cooldown again. What is the cooldown period? The cooldown period is the time required prior to unstaking your tokens. You must start the cooldown period before you can unstake your tokens. You can start the cooldown period by going to the staking section, select 'unstake' and click on 'activate cooldown'. It will require one transaction to be sent. The cooldown period by default is 10 days, but this can be further extended by the governance. IMPORTANT: After the cooldown period is complete, you have a 2 day window where you can unstake. If you do not unstake during that period, you will have to start the cooldown process over again. ex. If the cooldown period was activated 10 days and 4 hours ago, you can unstake! If the cooldown period was activated 12 days and 2 hours ago, you can not unstake, and you will need to start the 10 day cooldown period again. Can I add stkAAVE or stake more AAVE while in cooldown period? You can stake more AAVE tokens in the Safety Module or receive stkAAVE, but that would increase your cooldown period based on the amount received. Even if the amount received is big enough, it will reset your cooldown period requiring you to activate it again before you can unstake. How do I claim my rewards? You can claim your rewards at any time over the staking section clicking on "Claim". The AAVE tokens from the reward will be in your connected wallet as soon as the transaction is confirmed. Sources https://aave.com/ Not financial advice. DYOR. DCA. BTD. HODL. #crypto #cryptocurrency #crypocurrencies #cryptoaddict #cryptoalert #cryptobeliever #bitcoin #ethereum #cardano #public #publiccommunity #dyor #longterm #growth #learningtoinvest #feedyourbrain #learning #learningaboutcrypto #possibilities #newinvestor #tech #technology Join Celsius Network using my referral code 130879c68d when signing up and earn $50 in BTC with your first transfer of $400 or more! #unbankyourself - https://celsiusnetwork.app.link/130879c68d
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