Process to liquidation stkAAVE for mUSD Savers

This is the process to liquidate the accrued stkAAVE for the benefit of the liquidity providers of the mUSD Savers (imUSD). The stkAAVE is earned from the mUSD bAssets USDC, USDT and sUSD that are deposited into Aave.

High level liquidator contract process:

  1. Every 10 and a bit days
  • all stkAAVE for the mUSD bAssets in Aave (USDC, USDT and sUSD) is 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 cooldown of the stkAAVE is initiated.
  1. After the 10 day cool down
  • Redeem AAVE from the stkAAVE to the liquidator contract
  • Swap AAVE for USDC using Uniswap V3
  • Mint mUSD from the USDC
  • Deposit the mUSD into the Savings Manager
  • Stream mUSD to Savings Contract (imUSD) over the next 7 days.

This is a snapshot of the amount of stkAAVE that has accrued until 30 June 2021 for the mUSD Savers.
Screen Shot 2021-06-30 at 12.48.23 pm

Notes

  • Aave is no longer rewarding sUSD deposits
  • Around 30 stkAAVE is being accrued each week from the USDT and DAI deposits.
  • At 231 AAVE, 30 stkAAVE is worth around 7k USDC which provides a 1.7% APY boost to mUSD Savers
  • Liquidating all the previously accrued stkAAVE will boost the mUSD saving rate by 25% APY for the week.
  • Unlike the COMP liquidation, the amount of stkAAVE that is liquidated each week can not be capped. A change to the liquidator contract would be needed to add this functionality.

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

The above stkAAVE number were incorrect for the following reasons:

  1. sUSD is in the old Aave V2 integration contract which means it can’t claim stkAAVE. sUSD was not moved to the new mUSD Aave integration contract as Aave stopped giving rewards for sUSD
  2. The Aave incentives interface is misleading. It’s not possible to split out the stkAAVE to a token level if an integration contract handled multiple tokens. This is the case for the integration contract that handled DAI and USDT. The result is the above numbers had double counting of the unclaimed rewards.

Here’s the new corrected number before the first Aave rewards were claimed
Screen Shot 2021-07-01 at 8.38.55 pm

The claimed stkAAVE is now in cooldown and will be available for liquidation Sat, 10 Jul 2021 12:21:39 GMT

The first liquidation of the stkAAVE has just been run with tx 0x63833412ba5034c58fab9755987fb7cf25e4a9834f7a3aa5ecbe350a0800c383

The following goes to the savings contracts
mUSD 59,690
mBTC 0.1984 ($7,187.21)
GUSD 3,365

The big job in the platform rewards for this week is from the stkAAVE liquidation.