Asset’s liquidity is fragmented across the different networks with different volume of available liquidity. Liquidations may require to exchange large volumes of liquidity. If there isn’t much available on a network this results in high slippage. Which may lead to further price drops and cascading liquidations
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thanks for the reply Alexandra! 
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+1 to everything @Alex_BertoG said. I’d add that while these parameters appear more conservative our early simulation results suggest they actually are slightly riskier than Ethereum mainnet for the same assets, at least for the non-stablecoins.
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Why a so much lower LTV for wBTC than for WETH? Doesn’t seem to make sense to me.
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The risk parameters are constrained by the liquidity on the network. There’s very little WBTC vs WETH volume on Avalanche atm
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To add to the previous comments by @Alex_BertoG and @inkyamze , another factor that the Avalanche team took into account into this initial configuration is of a bit more technical nature.
Even if theoretically liquidations work exactly the same across the different Aave deployments on distinct networks, in practise, there can be potentially some delay of integration for liquidators out there to support the new deployment. Their strategies in some cases are pretty sophisticated nowadays, so it is important that the parameters take that aspect into account when defining initial parameters.
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I still think the LTV for wBTC is incredibly low on Avalanche. On Polygon the LTV is 70% with a reserve size of 484.4M , while on Avalance the maximum LTV is only 60% with a reserve size of 743M.
I’d like to split some of my funds to Avalanche simply for mitigating risk, but with the worse risk parameters I don’t know if it’s worth it or if it’s not better to just keep my funds on Polygon even though Polygon has worse rewards than Avalanche
Can this be changed with a proposal?
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Hi Josef
There is ~$730m WBTC on Aave Avalanche however there is only about $50m of WBTC liquidity on Avalanche dexes, that’s just 6% of Aave collaterals. It is a risky situation for the Protocol: in case of market consolidation, some positions might need to get liquidated, the limited Dex liquidity would result in significant price slippage for WBTC, with a further price drop comes cascading liquidations. Unfortunately, the WBTC dex liquidity on Avalanche has not improved since the launch of the market while it has gathered large WBTC liquidity making the risk parameters rather aggressive.
Polygon is safer because there is >$150m of WBTC liquidity on dexes which would allow to safely liquidate the $480m of WBTC collaterals on Aave in case of market consolidation.
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Oh I see, I didn’t take the DEX liquidity into account
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Aave is attract me towards it , team is hard working and unstoppable growth I can see
Governence token I love it 
No Doubt, AVVE is resourceful project and gives many important features to Decentralised Finance protocol like cross-chain, I was very excited when I heard about this, the risk mitigation feature is interesting, but it’s a upgrade to its previous versions.
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