LiquiShield

Liqushield is an a automated DeFi position protection system that safeguards users from liquidation event on Aave in volatile crypto markets without requiring them to custody their assets in smart contracts.

The Problem: The crypto market faces severe volatility challenges. On October 10, 2024, $19 billion in assets were liquidated in a single event, demonstrating the catastrophic risk of leveraged positions. Users struggle to monitor prices 24/7, and existing solutions like DeFiSaver primarily cater to wealthy "whales" who can afford large deposits and are comfortable trusting their assets to smart contract custody.

Liquishield offers options for users to create long/short position without crompomising on yield and the fear of liquidation.

Liquishield offer 3 protection modes -

1. Stop Loss Mode - Automatically repays debt and closes positions when collateral (for long positions) hits a predefined minimum price
2. Take Profit Mode - Automatically closes positions when collateral (long) reaches a configured maximum price
3. Leverage mode - Continuously rebalances to maintain a specific health ratio, ensuring positions stay within safe bounds.

Key Differentiators:

No custody required - Users only delegate permission to a PKP wallet, never transferring asset ownership Revocable anytime - Users maintain complete control and can revoke permissions instantly No minimum deposit - Accessible to average users, not just whales AI agent monitoring - Off-chain agents continuously monitor prices and execute protective actions on behalf of users

This project is built on Vincent (Lit Protocol's automation platform) and leverages Lit Actions for secure, decentralized execution.

The users first connect their wallets and delegate specific permissions to a Programmable Key Pair (PKP) wallet generated through Lit Protocol. The PKP wallet acts as an agent that signs transactions on behalf of users based on predefined policies

The user can create a Aave position based on 3 availabe modes. With th ehelp of vincet and delegated permissions by users the collateral is supplied on Aave and debt token can be accessed.

There is also an offchain rebalancer that monitors for price of asset every 30 seconds and triggers position rebalance using delegated pemissions for vincet app by users to maintain healthy position and avoid liquidation

Users can always revoke their permission and do need to trust and custody their assets to smart contract thanks to lit protocl