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As a safety measure for the liquidity providers against excessive stable rate borrowing, the Aave protocol implements a mechanism called rebalance.
The rebalance allows to rebalance the interest rates up (if there is need for liquidity) or down (if a borrower can obtain a more competitive stable rate).
In perspective of incentivizing the V1 -> V2 migration, as discussed in https://governance.aave.com/t/aave-protocol-v1-v2-migration-tool-and-transition-plan/2053/26, the first step is to disable stable rate borrowing.
To also facilitate the conversion of the outstanding debt to variable, the rebalancing function will be replaced with the rate swap. If stable rate borrowers will need to be rebalanced, they will be swapped to the variable mode.
The text was updated successfully, but these errors were encountered:
As a safety measure for the liquidity providers against excessive stable rate borrowing, the Aave protocol implements a mechanism called rebalance.
The rebalance allows to rebalance the interest rates up (if there is need for liquidity) or down (if a borrower can obtain a more competitive stable rate).
In perspective of incentivizing the V1 -> V2 migration, as discussed in https://governance.aave.com/t/aave-protocol-v1-v2-migration-tool-and-transition-plan/2053/26, the first step is to disable stable rate borrowing.
To also facilitate the conversion of the outstanding debt to variable, the rebalancing function will be replaced with the rate swap. If stable rate borrowers will need to be rebalanced, they will be swapped to the variable mode.
The text was updated successfully, but these errors were encountered: