Increasing wETH collateral factor on Sonne Finance

Increasing wETH collateral factor on Sonne Finance

Sonne Finance is a decentralized platform that offers access to a range of financial services. Recently, there was a proposal to increase the wETH collateral factor on Sonne Finance from 75% to 80%. The proposal was made in response to requests from the Sonne Finance Discord channel, where users expressed interest in the change.

Increasing the wETH collateral factor would provide more security for lenders, reducing the risk of default, and encouraging more borrowing. Users would be able to borrow more funds with the same collateral amount, which would increase liquidity on the platform. Additionally, it would make Sonne Finance more similar to other decentralized platforms like AAVE, which allow ETH/wETH collateral factors up to 80%.

However, increasing the wETH collateral factor could also have some drawbacks. Borrowers may be more likely to default on their loans if they're allowed to borrow more funds with the same amount of collateral. Using borrowed funds to invest in volatile assets may also lead to increased volatility on the platform, which could negatively impact both lenders and borrowers.

The proposal is worth considering, as it presents a balance between the benefits of increased security and liquidity and the potential drawbacks of increased risk. It's important for the community to have a say in the development of Sonne Finance, and considering proposals like this can ensure that the platform remains reliable, transparent, and secure for all users.

The proposal has received a total of 84 votes, all of which are in favor of it.

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