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1Clear out junk files and repair common Windows errors2Scan for outdated or missing drivers - takes under a minute3Repair Windows errors before they cause bigger problemsAave V3 uses oracle prices to value collateral and debt, which affects a position’s health factor and whether it is eligible for liquidation. A health factor below 1 makes a position eligible, but the oracle setup, liquidation rules and outage safeguards depend on the specific Aave market, reserve and deployed version.
How does Aave V3 get asset prices?
Each Aave reserve is associated with an oracle contract, and oracle selection is made through Aave Governance. Aave’s production-market overview identifies Chainlink Price Feeds and the Correlated Assets Price Oracle (CAPO) as oracle types in use. CAPO is intended for strongly correlated assets—for example, a wrapped asset priced in relation to its underlying. Which oracle and feed apply depends on the reserve and chain; there is no single feed configuration to assume for all Aave V3 markets. See Aave’s oracle documentation.
Aave also maintains custom price-feed adapters for cases where plain Chainlink pricing does not meet Aave’s risk requirements. The Aave Price Feeds repository describes that purpose, but it is not a complete inventory of adapters currently active across markets.
How do oracle prices affect health factor?
Aave uses collateral values, liquidation thresholds and debt to calculate a position’s health factor. Oracle prices feed into those valuations: a change in collateral or debt value can move the factor, as can accrued interest on debt. Aave’s V3 overview says a health factor below 1 makes a position eligible for liquidation.
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Eligibility is not the same as an automatic or immediate liquidation. A liquidator must submit a transaction, and whether one is executed depends on market conditions and transaction activity. A price move or interest accrual can therefore make a position eligible before a liquidation transaction occurs.
What happens if an oracle or L2 sequencer goes down?
Aave’s PriceOracleSentinel checks oracle health when determining whether certain operations are allowed. Aave describes the sentinel as especially relevant to L2 sequencer downtime: it can restrict borrowing under specified conditions and provides a grace period for liquidation after the oracle recovers. The exact sentinel configuration and grace period are market-specific, so do not assume that every chain or reserve has the same safeguards. Aave explains the mechanism in its smart-contract oracle documentation.
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The sentinel is an operation-eligibility safeguard, not a guarantee that prices are always correct or that a position cannot be liquidated. Its presence does not eliminate oracle, network or collateral risk.
How does liquidation work on Aave V3?
A liquidator repays some of a borrower’s debt and receives collateral under reserve-level liquidation rules. The collateral is transferred with a discount or bonus defined by reserve parameters. The applicable incentives, liquidation thresholds and other rules depend on the asset and market. Aave’s V3 overview describes the basic repayment-for-collateral mechanism.
Why there is no universal close-factor percentage
The close factor limits how much debt a liquidator may repay in a liquidation transaction, but its behavior depends on the implementation and version. Aave’s risk framework and V3.3 feature document describe different version-specific rules:
| Source and scope | What it says about liquidation size |
|---|---|
| Aave DAO risk framework | Describes full liquidation as a position approaches insolvency, including health factor below 0.95. |
| Aave V3.3 feature document | Describes a 50% default close factor and a maximum of 100% below a health-factor threshold; the cited description discusses a redesign of how the close factor applies across the position. |
These descriptions are not interchangeable rules for every Aave V3 deployment. The V3.3 document’s threshold is not stated here as a universal value; check the implementation and current parameters for the market in question before relying on a specific close factor.
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Which reserve settings affect liquidation risk?
Aave’s risk framework discusses several reserve-level controls. They are calibrated by asset and may differ between markets:
- Loan-to-value (LTV): Affects how much borrowing a position can support against collateral.
- Liquidation threshold: Contributes to the health-factor calculation and the point at which liquidation eligibility can arise.
- Liquidation penalty or incentive: Affects the collateral amount associated with repayment in liquidation.
- Supply and borrow caps: Limit exposure to a reserve through deposits or borrowing.
- Isolation mode and siloed borrowing: Restrict certain combinations of collateral or debt to manage exposure.
- Efficiency mode (eMode): A risk-control feature for specified asset categories; applicable settings depend on the market.
These settings work together; a single parameter does not describe the full risk of a position. For a specific case, identify the chain and market, the collateral and debt reserves, and their current parameters rather than relying on a value quoted for another deployment.
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Can an oracle error liquidate an Aave position?
Oracle prices affect collateral valuation and health factor, so an incorrect or disrupted price can affect liquidation eligibility. Aave’s risk overview identifies oracle risk alongside smart-contract, collateral, network and bridge risks. It describes mitigations such as decentralized feeds, governance, risk parameters, audits and review, and a bug bounty; those measures reduce or manage risk but do not eliminate it. Assets can lose value or liquidity, feeds can fail or be compromised, contracts can contain vulnerabilities, and networks or bridges can have problems. See Aave’s risk overview.
What to verify for a particular Aave position
Before relying on a quoted oracle, sentinel setting or liquidation percentage, confirm that it applies to the position’s actual deployment. Check:
- the chain and Aave market;
- the collateral and debt reserves, including the oracle or feed type associated with each;
- the current health factor and reserve-specific LTV, liquidation threshold and liquidation incentive;
- any applicable supply cap, borrow cap, isolation-mode, siloed-borrowing or eMode restrictions;
- the deployed protocol version and its close-factor rules; and
- whether the market’s sentinel configuration includes a sequencer-related restriction or recovery grace period.
Aave’s documentation describes the protocol-wide mechanisms, but it does not provide a complete current inventory of oracle addresses, feed pairs, sentinel settings, CAPO bounds and reserve parameters for every chain and asset. Those live details must be checked against the relevant market data or deployed contracts.
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