Cono Finance Is Here To Protect Your Aave Debt Positions — WAGMI!

Gelato
4 min readAug 4, 2021

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Let’s face it, when users take out debt, all too often they do so unprotected leaving them vulnerable to costly liquidations. That’s exactly what happened in May 2021 when $12 billion in defaults cascaded across the crypto markets in a week alone. In DeFi, lending protocols account for $32 billion in TVL and at one point reached a high of $48 billion. As the value locked in these protocols increases, so will the demand for proper protection in order to avoid costly defaults.

That is why we at Gelato are pleased to show Cono Finance to the world, a UI for Gelato’s liquidation protection solution for Aave users on Polygon. We recently teamed up with BootNode, a team of web3 experts that implemented and maintain this Aave Gelato Network frontend integration. Our track record speaks for itself when it comes to safeguarding collateral through collaborating with widely-known protocols such as Instadapp with their debt bridge as well as KeeperDAO and their “Just In Time Underwriter.”

Users love everything about Aave except for the constant risk of being liquidated. Now imagine a version of Aave — without the liquidations. Gelato Network makes this dream world a reality for all developers and their users alike, as showcased on Cono Finance. — Luis (gitpusha), Legendary Member, Gelato Network

Meme credits: gitpusha

On Cono Finance, Aave users can specify their Minimum Health Factor and their Wanted Health Factor. Once a user’s Health Factor on Aave drops below their specified minimum threshold, Gelato will rebalance the user’s debt position on Aave, to attain the user’s specified Wanted Health Factor again. The bots achieve this on behalf of the user by swapping some of the user’s highest value collateral for their highest value debt token and then repaying some of that debt. The bots swap the user’s collateral on 1inch, in order to make use of aggregated liquidity and lower slippage. This animation visualizes the sequence of steps that are automated for the user:

The Gelato bots run algorithms off-chain, to compute in real-time the exact amounts of collateral and debt tokens needed to bring the user’s position back to their Wanted Health Factor. The on-chain rebalancing is trustless as Gelato’s audited smart contract integration middleware requires bots to comply with the user’s set of instructions, i.e. they cannot use more than the amount of user’s collateral needed for swapping and repaying their debt, in order to attain their Wanted Health Factors. This highly reliable middleware and infrastructure can be accessed by any UI developer.

Cono Finance is just one frontend integration of Gelato’s underlying liquidation protection smart contract middleware and bot network. We encourage all devs to reach out to us and we’ll make sure you have the tools to integrate automated Aave user protection on your own UIs too. — Matthieu, Legendary Member, Gelato Network

Cono Finance comes in less than a month and a half after Gelato received a grant from the Aave Grants DAO to build liquidation protection. Aave ranks #1 in TVL in all of DeFi and caters to over 25k users and growing. In the future, be on the lookout for further tools to help manage positions as well as closer integrations with Aave. We’re All Gonna Make It!

About Gelato Network

Gelato Network is Web3’s premier automation network, enabling developers to automate a wide variety of arbitrary smart contract executions on and across all EVM-based compatible blockchains such as Ethereum. Examples of use cases developers have built on top of Gelato include Limit Orders on AMMs like Uniswap, automatic compounding of yield farming vaults, Aave liquidation protection, MakerDAO debt ceiling updates, automated liquidity management, and even the petting of Aavegotchis. Our ultimate goal is to automate everything and by giving developers the reliable tools they need to do this, we can empower their users to get the most out of their Web3 experience.

►Check out what we’ve been working on at 🍦https://gelato.network/🍦

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