This forum post is published by nonstopTheo on behalf of RiskDAO.org
- Aave v3 bad debt data can now be tracked in real time, on any of the Aave v3 markets (Arbitrum, Avalanche, Optimism, Polygon)
- The integration has been funded by a grant from Aave Grants DAO to RiskDAO (riskdao.org)
- The data is useful to Aave users, contributors, community and tokenholders alike: Bad debt data is surfaced and easily displayed
- The code is fully open source and available on github (both frontend and backend)
- Once v3 is live on Ethereum, the data will be supported in the dashboard as well
- Aave will be the only major lending platform who features and monitors its bad debt across all of its multichain deployments
In an attempt to bring transparency to DeFi lending protocols, RiskDAO created the bad debt dashboard which displays the insolvency level of lending protocols. Bad debt stems from borrow positions that have not been liquidated. Too much bad debt is a red flag as it indicates poor risk management standards. Most lending protocols do not easily display this data point which leaves users in the dark.
Total bad debt in Aave v3 is a relatively small amount of $16.1k (as of 10 Nov ‘22). The dashboard provides a chain-by-chain breakdown to highlight where bad debt accrues.
Historically, Aave bad debt has been small and mostly due to dust accounts: The gas cost in liquidating these positions is higher than the payoff. Hence, liquidators struggle to make money from liquidating these tiny insolvent accounts and no action is taken.
The dashboard will allow anyone to access and track changes in bad debt. There is no need to wait for official reports or disclosures. This is a step change in bringing transparency to DeFi lending markets and highlights Aave’s commitment to risk management & disclosure standards.
The Aave v3 dashboard can be accessed at bad-debt.riskdao.org.
Users can access dashboards for each individual chain deployment.
From there, users can see details for all insolvent accounts by clicking on the link on the right hand side.
Bad debt dashboard: bad-debt.riskdao.org
Aave v3 bad debt dashboard (direct link): Risk DAO | bad-bebt dashboard
Bad debt source code via Github: