AutoSafe: Introducing Automatic Self-Liquidations to Kashi

Today we’re announcing the first proof of concept for AutoSafe. This new tool introduces automatic self-liquidations, a feature we’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.

An 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 any other DeFi platforms. When degens realize they're never going to pay a fee for liquidation, they'll be willing to borrow more, which means borrowing rates are higher, which means lenders make more money, which attracts more lenders and therefore TVL into Kashi, which means more fees in general. This is how AutoSafe changes the game while letting degens sleep tight and forget about liquidations.

Go vote to get AutoSafe on Kashi!

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