❄️Frozen Markets & Reserves

How is a Reserve or Market Frozen in Bonzo Finance?

In the Bonzo Finance protocol, a reserve can be frozen by calling the setReserveFreeze function on the PoolConfigurator contract, which is deployed for each Bonzo Finance market. This function can only be called by addresses with the RiskAdmin or PoolAdmin role, which is owned by the Bonzo Finance Governance. These roles can also be granted to other addresses by the governance.

What Happens When a Reserve is Frozen?

When a reserve is frozen, certain actions are restricted to protect the stability of the protocol and the interests of its users. In a frozen state, a reserve does not allow:

• New supply of assets

• New borrowing of assets

• Rate switching between variable and stable rates

However, a frozen reserve still allows:

• Repayment of borrowed assets

• Withdrawal of supplied assets

• Liquidations of undercollateralized positions

• Interest accrual (including stable rate rebalances)

Unfreezing a Reserve or Market

Yes, a frozen reserve or market can be unfrozen using the same process and smart contract function (setReserveFreeze) if the conditions are deemed suitable for reinstating supply and borrow functionalities.

Paused Reserves: A Step Further

In addition to freezing, a reserve can also be paused. A paused reserve is more restrictive than a frozen reserve, as it does not allow any protocol interactions, including:

• Supply

• Borrow

• Repay

• Rate switching (variable/stable)

• Liquidation

• bToken transfers

The same roles and processes used for freezing and unfreezing apply to pausing and unpausing reserves, via the setReservePause function.

Enabled Actions: Frozen vs. Paused Reserves

The table below summarizes the actions that are permitted depending on the state of the reserve:

Function	Frozen	Paused
Supply	No	No
Withdraw	Yes	No
Borrow	No	No
Repay	Yes	No
SwapRateMode	No	No
RebalanceStableBorrowRate	Yes	No
SetUseReserveAsCollateral	Yes	No
Flashloan	Yes	No
Liquidate	Yes	No
bToken Transfer	Yes	No

It's important to note that in the Aave V2 protocol, which Bonzo Finance is based on, it is not possible to pause a specific reserve; only the entire pool can be paused.