Aave Horizon can price stock collateral over the weekend, but it doesn’t answer whether anyone will take it when it’s liquidated.
The reference price is derived from perpetual futures, so it can move even when U.S. stock markets are closed. But while the price can reflect an after-hours drop, it can’t conjure up a buyer: if the collateral falls to the liquidation threshold, and no one will take the liquidated stock over the weekend, book value and the execution price become two different things. It’s a bit like listing a house at its appraised value when no one comes to view it.
A price is a price; a sale is a sale.
Whether Aave Horizon’s reference price can ultimately be realized depends on whether those stocks can be sold when liquidation happens. If they can be sold, and still fetch close to the reference price, then this assessment no longer holds.
The reference price is derived from perpetual futures, so it can move even when U.S. stock markets are closed. But while the price can reflect an after-hours drop, it can’t conjure up a buyer: if the collateral falls to the liquidation threshold, and no one will take the liquidated stock over the weekend, book value and the execution price become two different things. It’s a bit like listing a house at its appraised value when no one comes to view it.
A price is a price; a sale is a sale.
Whether Aave Horizon’s reference price can ultimately be realized depends on whether those stocks can be sold when liquidation happens. If they can be sold, and still fetch close to the reference price, then this assessment no longer holds.
