How are LTV and Liquidation Threshold calculated for credit delegation on Aave to ETH v2 Market??
- Aave Protocol
- Aave liquidation Aave
I have some questions regarding credit delegation on Aave to ETH v2 Market. Let's say a delegator has supplied asset A and asset B and has delegated their credit power to another actor (the delegatee) for both assets.
In Case 1, the delegatee borrows USDC against asset A and USDT against B. I want to know how the final LTV (Loan-to-Value) and Liquidation Threshold are calculated in this case. Are they aggregated averages of both cases, or distinct for each case?
In Case 2, the delegatee borrows X USDC against asset A and Y USDT against asset B, using the same address to borrow funds for both Aave flashloans. Again, I want to know how the final LTV and Liquidation Threshold are calculated. Is it an aggregated average or distinct for each case?
It's important to get a clear understanding of how these values are calculated to ensure there is enough collateral to cover each loan individually. Thank you in advance for your help.
The health factor and liquidation threshold of the delegator would be a weighted average of both borrow positions (USDC and USDT). When you delegate credit and someone borrows against it, it’s no different than opening a borrow position on the delegators account.