The discussion began with Yaron introducing B.Protocol, a decentralized backstop protocol that has been live on MakerDAO for a month. The protocol, which has already backstopped around $11m of ETH collateral and $4m of DAI debt, relies on committed liquidators who get priority in the liquidation process in return for their commitment. B.Protocol proposed a native integration with Aave by onboarding a new collateral type, USDC-B, backed by a strong commitment from B.Protocol backstop. This could potentially offer Aave users a x10 long position on USDC and pave the way for more collaterals to be backed by B.Protocol with high leverage opportunities.

The proposed risk parameters for this integration include a Loan To Value of 88%, Liquidation Threshold of 90%, Liquidation Bonus of 5%, Reserve factor of 10%, and a Maximum total supply controlled by the DAO, initially $5m. The Committed Backstop design involves a single liquidator who opens an account with a $0.5M USDC deposit and 0 debt. The liquidator can withdraw collateral or increase his debt only if his net position is over $0.5M. In the case of liquidation, if the account is unsafe and has USDC collateral, half the debt and 1.05d worth of USDC collateral are shifted to the liquidator's account using a flashloan.

Yaron also proposed a new collateral for Aave users, which he believes would allow better leverage, increase system stability during sharp market movements, and potentially prevent future Black Thursday events. He called for a community discussion on the requirements for community consent for such a collateral, any missing technical details, and the possibility of starting with a different collateral like ETH, WBTC, or USDT. Emilio found the idea interesting and suggested that Alex_BertoG might be able to provide insights on the risk-related aspects. The discussion is ongoing, with all parameters open for discussion and the potential for the development of such a protocol to be subsidized by B.Protocol.