|Network||Ethereum & Optimism|
liquidationPenaltyfrom 75% to 60%
selfLiquidationPenaltyfrom 70% to 50%
liquidationRatiofrom 175% to 160%
liquidationEscrowDurationfrom 12 months to 6 months
This SCCP proposes adjustments to SNX staking liquidation parameters in line with those proposed by Gauntlet in SCCP-266 with a modification to include changes to the liquidation escrow period which better align the value of escrowed rewards received with debt assumed.
The incentives to repay debt are weakened by insufficiently punitive liquidation penalties, but as Gauntlet's risk analysis has noted there is a balance to be struck between incentive alignment and liquidations at risk. Additionally, while volatility is heightened, lengthy flagging periods also can impose excess risk on healthy accounts and result in incongruences between liquidation rewards and debt assumed via socialized liquidations. This proposal seeks to find an optimal balance between these variables.
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