Autonomy Introduces AutoSafe: Automatic Self-Liquidations
Autonomy announcing the first proof of concept for AutoSafe. This new tool Autonomy introduces Autosafe: automatic self-liquidations, a feature they’re really excited about because it could rid degens from the risk of liquidation on lending platforms. It uses Autonomy’s capabilities to let them liquidate themselves before they reach their loan to value ratio.
How it Works
First things first, let’s review how DeFi borrowing markets work. When you take out a crypto loan, you have a collateral limit that your collateral cannot fall below, otherwise you get liquidated. This is usually denoted by a collateral percentage. Some DEXes like Sushi, however, use an LTV (loan to value) of 75%. This means that for every $1 of collateral, you can only borrow up to $0.75.
For example, if you have $2,000 dollars of Ethereum and you put it up as collateral to borrow DAI, you will only be able to borrow a maximum of $2,000 x 0.75 = $1,500 on Sushi. If either the value of the borrowed asset goes up, or the value of the collateral goes down, you will get liquidated.
You might ask: In that case, how do the Autonomy bots move faster than the liquidation bots? It’s not that the bots move faster, it is the fact that with Autonomy, you’re able to set a custom threshold to liquidate yourself. At the point of 70% LTV, for example, the liquidators cannot liquidate you as the threshold is 75%. You however, can liquidate yourself using Autonomy.
When the self-liquidation occurs, the contract takes out a flash loan (1000 DAI), pays back the loan, gets the collateral (ETH), swaps the majority of the collateral into DAI, pays back the flash loan, and the remaining amount of ETH is sent back to the user, along with the 1000 DAI.
AutoSafe on Kashi
As you may know by now, there’s a proposal underway that would let degens on the Kashi lending platform sleep tight by integrating with AutoSafe. Kashi is SushiSwap’s lending and margin trading platform.
With $2.05 billion in TVL despite current market conditions. SushiSwap currently holds one of the top spots for decentralized trading platforms across 14 different chains. Its popularity has only extended further with the introduction of BentoBox and apps like Kashi and Onsen. There are over 150,000 Sushi holders and 25,000 active community members on Discord.
This integration with AutoSafe makes these users feel safer about taking out loans and, ultimately, increases the amount of TVL that is entrusted to Kashi, SushiSwap, and other DeFi platforms. When degens realize they’re never going to pay a fee for liquidation, they’ll be willing to borrow more. Borrowing rates are higher, lenders make more money, attracts more lenders and therefore TVL into Kashi, more fees in general. This is how AutoSafe changes the game while letting degens sleep tight and forget about liquidations.
About Autonomy Network
Autonomy Network is the leading decentralized automation protocol building critical automation infrastructure for Web3 dApps. Autonomy Network helps DEXes across Ethereum, Binance, Avalanche, Polygon, and other chains and Layer-2 solutions increase their volumes. Enabling them to offer wider range of features such as limit orders, impermanent loss protection, recurring payments, and more.
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