Our GHO Leverage Trading Bot on AAVE will bring more lending and borrowing activities to V3 and more usage of GHO in the meantime. The bot will provide a one-stop shop type of service for traders to add leverage to their positions via lending and GHO. The risk management layer of the bot will provide automatic deleverage to avoid liquidation, which may significantly improve users’ position risk and user experience.

Volume’s AAVE leverage trading bot will bring a fully automated leverage trading and risk management services to AAVE’s lending ecosystem. This bot will give users supply-borrow-swap functions to increase their leverage while monitor users’ loan positions and take actions to help users reduce risk and avoid liquidation. This can improve AAVE in a number of ways:

1. The GHO leverage trading bot will increase supply and GHO borrow volume on AAVE. Users of the bot will bring in their collateral as supply to borrow GHO in order to swap for more collateral tokens. The bot’s FE will facilitate the entire leverage trades in a simple UI, helping ease the operational challenge. 

2. The lending bot will also reduce overall liquidation, which lowers AAVE’s systemic risk. As users’ loans will get repaid automatically before their risk health factor gets to liquidation levels, the number of bad loans will see drastic drop. This is especially beneficial if the market undergoes sharp selloff. When major selloff happens, most risky tokens go down in price and loans’ risk tend to spike up in a short amount of time. Due to the speed of these events, borrowers usually have little to no time to react, which collectively makes AAVE’s systemic risk rise. The lending bot’s automation will be extremely useful for AAVE and its borrowers.

Conclusion: Bringing leverage trading and loan management to Aave will increase the attractiveness of AAVE lending pools to borrowers. It will also lower the risk of negative assessments from Aave loan risk auditors and the pressure to respond from various audit positions. More automation will make risk assessment easier.