Glossary

Borrow Limit

A user’s Borrow Limit is an expression of the value of the assets they are able to borrow based on the value of their supplied assets and these assets’ combined Loan-to-Value figures. Once this Borrow Limit is exhausted, the liquidity of the account has reached zero. If the value of the user's collateral were to then fall further or they were to fail to keep up with the interest accrued on their borrowed balance, then their collateral would become vulnerable to liquidation.

Borrow Limit Used

Borrow Limit Used is simply an expression of the amount of liquidity that a user has remaining but stated as a percentage and based on the value of the assets they currently have provided and their combined Loan-to-Value rates.

Loan-to-Value

An asset’s Loan-to-Value is used to determine the maximum amount of value a user can borrow based on that of their supplied assets. If a user has supplied $1000 USD worth of ETH as collateral, and the Loan-to-Value figure is 80%, then the user can borrow up to $800 USD worth of assets.

Collateral Factor

The maximum that can be borrowed on a particular token e.g 80% collateral factor means that you can borrow up to 80% of your collateral’s value.

Reserve Factor

The percentage of the borrower's interest that accrues to the protocol collector contract as a reserve for the ecosystem.

Close Factor

The maximum amount that can be liquidated in a single transaction e.g. 50% close factor means that a maximum of 50% of a liquidatable account's borrow can be repaid in a single liquidate transaction.

Liquidation Incentives

The incentive that is given to the liquidators to perform liquidations and keep the protocol solvent e.g. liquidation incentive of 8% means that liquidators will receive an extra 8% of the borrower's collateral for liquidating the transaction.

Liquidation

Once an account with an active borrowed balance exhausts its liquidity and then accrues further debt, the user is considered to be insolvent. This necessary mechanism for maintaining platform health is incentivized with a liquidation bonus that grants the liquidator the user’s collateral at a discount relative to the market price at the point at which the liquidation occurs. Due to this discount, users should avoid allowing their accounts to become under-collateralized and subject to liquidation.

Borrow Cap

Borrow Cap is the max borrow allowed. This is for each particular asset. The reason is to safeguard protocol from insolvency risk.