Currently, liquidation bonus rates of assets on Wing are all the same. However risks that liquidators undertake vary when liquidating different assets due to different volatilities of price. Thus, I propose to customize liquidation bonus rate for each asset.
To start with, I suggest changing liquidation bonus rates of all four stablecoins from 8% to 5%, including pUSDC, pDAI, pUSDT and pSUSD. Considering the fact that what liquidators earn is what borrowers loss in liquidation event and the volatilities of stablecoins are pretty low, 5% seems to be fair.
I think liquidation bonus rates of other assets also need adjustment but I don’t have specific numbers at the moment. If you have any idea about this, please leave a comment below.
On the third day of the auction, all the auctions were finished when the assets were discounted by 3%. At the same time, considering the incentives for users to actively liquidate, it is recommended to reduce to 3%-5%.
I think 5% is more appropriate, the 8% discount rate increased the enthusiasm of the liquidators, but it discourages the enthusiasm of borrowers，it is not conducive to the long-term development of the project.
Setting different liquidation bonus for different assets is a common way. As high as 8% for all assets is unnessary. 7% would be fine for Bitcoin and ETH.
Good point! The facts about auctions has well proven that a 3% discount is enough for all assets when prices are not fluctuating sharply. Thus a 5% discount as liquidation bonus for stable coins is totally fine.