Process to liquidation stkAAVE for GUSD Feeder Pools

As the GUSD in the GUSD Feeder Pool is held in Aave, staked Aave (stkAAVE) is given as a reward to GUSD Feeder Pool’s integration contract. This is the process to liquidate the accrued stkAAVE for the benefit of the liquidity providers of the GUSD Feeder Pool Vault.

High level liquidator contract process

  1. Every 10 and a bit days
  • all stkAAVE for the GUSD feeder pool will be claimed to the platform integration contract from Aave’s incentives controller.
  • The stkAAVE is transferred from the platform integration contract to the liquidator contract.
  • 10 day cool down of the stkAAVE is initiated.
  1. After the 10 day cool down
  • Redeem AAVE from the stkAAVE in the liquidator contract
  • Swap AAVE for GUSD using Uniswap V3
  • Transfer GUSD to GUSD Aave integration contract
  • Next Aave integration will increase the savings vault price due to the extra GUSD

As at block 12726942, 29 June 2021, 31.97 stkAAVE has been accrued by the GUSD Feeder Pool. With a 230 AAVE/USDC price on Uniswap V3, these stkAAVE are worth 7,353.10 USDC. With 7,345,549.13 in the GUSD Feeder Pool Vault, the stkAAVE will boost the value of the vault by 0.1%.

The following is a more detailed sequence diagram of the contract interactions in the liquidation process.

Some things to note:

  • There is no cap in the amount that can be liquidated in the stkAAVE processes. This is different to the COMP liquidation process which is capped to liquidating 20k USDC worth of COMP each week.
  • There is a 2 day window to redeem the claimed stkAAVE. After that the AAVE has to be claimed again.
  • The GUSD Feeder Pool is accruing around 1 stkAAVE per day.
  • The process is different for mUSD and mBTC bAsssets that are in Aave.
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This is very enlightening to see. Thanks @naddison

@derc would be great to simplify this as a tweet storm on how save get’s such good yields.

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Love these technical stuff :rocket:

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