No liquidation risk: We are creating a specialized worker for this strategy that will remove the ability for keepers to liquidate the positions. This is because as mentioned before, liquidation is unnecessary for this strategy due to its setup; When one position drops in equity value, the other one's equity value rises the corresponding amount, making the aggregate change to equity value close to 0.
Yet, if liquidation was turned on, though very unlikely with automated rebalancing, it would be technically possible that if the price of the crypto asset moved dramatically, one of the positions could be liquidated unnecessarily (due to liquidation monitoring individual position health instead of the health of the aggregate strategy). With no liquidation, this risk will not exist within the Automated Vaults.
As mentioned before, it’s important to note that this implementation DOES NOT increase the chance of bad debt to lenders, because the debt ratio of the aggregate strategy will not materially increase. With this strategy, the Equity Value and Safety Buffer remain healthy at all times, which is why it is market-neutral. In fact, the volatile asset’s price could drop 90% and the aggregate debt ratio of the two positions would still not increase enough to trigger liquidation according to our current parameters for leveraged yield farming. Of course, this would never happen in practice because our rebalancing mechanism would kick in much sooner.