In this article, I will answer this question from Flipside Crypto:
My approach to this question is I will calculate the liquidator's net profit. According to AAVE's documents:
Gross profit per liquidation = 50% * borrower's debt * liquidation bonus (4%-12.5%) Net profit = Gross profit - gas fee Net profit > 0 ⇒ Gross profit - gas fee > 0 ⇒ 50% * borrower's debt * liquidation bonus > gas fee ⇒ borrower's debt > 2 * gas fee / liquidation bonus (4%-12.5%)
Replace the liquidation bonus with the upper limit and lower limit, we will get the minimum debt needed to cover the gas fee.
⇒ The safe zone is [0 - minimum borrower's debt]
I will use Kakamora's query to calculate the C-ratio from AAVE.
To calculate the gas fee, I will get the average gas fee from all transactions in aave.liquidations table.
First, I will use the C-ratio table, select only <1000$ position with 200% > debt ratio > 75% to find out whether those positions exist
Combining the above table with an external website to check health factor: