Swapping Borrowed Assets

Right now Instadapp allows you to swap your existing debt from one collateral type to another within the protocol.

It can be used to refinance debt to achieve a better rate and also used to execute a short position.

The caveat using Intsdapp is that you can only do it if you move your positions to their platform/smart contract. If you wish to withdraw back to your wallet you’re required to pay back all your loans :(

It would be nice if Aave implemented an easy way to swap debt (for example a USDT borrowed position into USDC) on its website for v2 and v3 while keeping your assets in your wallet and not having to liquidate/pay back loans.

Instadapp utilizes protocols not part of AAVE to implement those features in the background. It isn’t possible with only the features of AAVE to swap debt.

sorry, I’m a tad bit of a noob but could it be done using flash loans?

Should be possible with flashloans + e.g. paraswap which would be very similar to what is currently done for repay with collateral and collateral swap.

added feature request to Aave’s interface repo

Note that debt swaps are also possible when using Aave through DeFi Saver, though similarly you have to import your position to a proxy smart contract wallet in order for these additional complex features to be possible.

You can find those options in our Loan Shifter at DeFi Saver though, like mentioned, you’d need to import or migrate your position first.

If you’d like to give the interface and these features a try note that there’s also a simulation mode available in the app, where you can, for example, enter your account address for tracking, then turn on simulation mode and then test the position migrating and debt swapping process (without affecting your actual funds in any way, it’s all done in a sandboxed testing environment on a private mainnet fork created for you).

However, at the end of things, you’d also not be able to migrate your position back to sitting on your account.

If I can provide any more information regarding this, please don’t hesitate to @ me, though I understand you’re trying to avoid any such migrations, so hope this doesn’t across as spammy and is actually useful to someone.

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looks like 0xPilou also made a smart contract for this kind of thing in 2021