Author:
Hover Labs - [email protected]
Created:
10/05/2021
Summary
With the passing of KIP-006, the liquidity pool has been prioritized as the primary liquidator for the protocol. Right now the rewardPercent on the liquidity pool contract is set to 1%, which feels like too low a reward for bot-writers.
We propose that this reward percentage gets raised to 10%, per the previous signal request put forth 3 days ago:
Motivation
To date, individuals have successfully liquidated 165,908.07 XTZ from ovens over 245 liquidations, while the pool has liquidated 8.2 XTZ from 64 liquidations (many of which weren’t actually profitable to execute).
With the passing of KIP-006, the changes made to the protocol mean that individuals who were previously liquidating ovens (and gaining 100% of the collateral) will no longer be getting the opportunity to do so until the collateralization drops further than (currently) 180%. The goal of KIP-006 was to balance the incentives between individual liquidators and the pool participants in order to make sure the pool remains supplied even when the farms are done emitting in a year from now.
Details
This is a really simple change, just invoking %updateRewardPercent with a nat(10), and it changes the system in such a way that anyone who liquidates an oven through the pool will receive 10% of the collateral from the liquidated oven before the rest of it is swapped and deposited back into the pool.
