How to track on-chain positions and prevent liquidation in on-chain lending borrowing?
- Aave liquidation Aave
I am new to on-chain lending borrowing and have a noob doubt. How do you guys keep track of your on-chain positions and prevent them from getting liquidated? Is there any kind of tool that may alert me on time, so that I can take the required action (add collateral or repay the loan)?
I would appreciate any suggestions or recommendations on how to manage on-chain positions effectively and avoid liquidation. Thank you in advance for your help!
Answers 2
Tracking and managing on-chain positions can be a complex process, but there are several tools and strategies you can use to help prevent liquidation and manage your positions effectively. Here are some suggestions:
Use a DeFi portfolio tracker: A portfolio tracker like Zerion, DeBank, or Zapper can help you monitor all your on-chain positions in one place. These tools can display your asset balances, loan balances, collateral ratios, and other important information that can help you manage your positions effectively. Some of these tools can even alert you if your positions are at risk of liquidation.
Monitor your collateral ratio: Your collateral ratio is the ratio of your collateral to your borrowed funds. It is important to keep your collateral ratio above a certain threshold to avoid liquidation. This threshold can vary depending on the protocol you are using, but it is typically around 150%. You can monitor your collateral ratio on the protocol's website or through a portfolio tracker.
Set alerts for your collateral ratio: You can set alerts through a portfolio tracker or using other alert tools like Zapier or IFTTT to notify you if your collateral ratio falls below a certain threshold. This can help you take action before your position gets liquidated.
Monitor the market: Keep an eye on the market conditions and how they may affect the value of your collateral. If the value of your collateral decreases significantly, your collateral ratio may fall below the threshold and put your position at risk of liquidation.
Consider using automation tools: Some protocols allow you to set up automatic liquidation protection, where your position will automatically be liquidated if your collateral ratio falls below a certain threshold. This can be a good option for those who are new to managing on-chain positions.
In summary, managing on-chain positions requires a combination of monitoring, tracking, and alerting. By using portfolio trackers, setting alerts, monitoring your collateral ratio, and staying informed about the market, you can effectively manage your positions and avoid liquidation.
There are various tools available such as HAL, which is integrated into the UI, as well as zapper.fi and debank.com for tracking positions. However, HAL stands out as it provides alerts.