Risk Management
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Risk parameters
Loan To Value
The maximum amount that can be borrowed for a specific mortgage is determined by the Loan To Value (LTV) ratio. For example, if the LTV is 75%, borrowers will be allowed to borrow 0.75 ETH worth of corresponding currency for every 1 ETH worth of collateral.
For a wallet, the maximum LTV is calculated as the weighted average of LTVs of collateral assets and their value. In particular, for a wallet that deposits the collateral assets that are worth in dollars
, and their LTVs corresponding to
, maximum LTV is
Liquidation Threshold
The liquidation threshold is the percentage at which a position is defined as undercollateralised. For example, a Liquidation threshold of 80% means that if the value rises above 80% of the collateral, the position is undercollateralised and could be liquidated.
The difference between the Loan To Value and the Liquidation Threshold is a safety cushion for borrowers.
For each wallet, the liquidation threshold is calculated as the weighted average of the liquidation thresholds of the collateral assets and their value. In particular, for a wallet that deposits the collateral assets that are worth in dollars
, and their liquidation threshold, respectively,
, the liquidation thresholds of wallet is
Health Factor
For a wallet, these risk parameters enable the calculation of the health factor:
where
is total borrows (in dollars),
is the values (in dollars) of collateral assets, and
is their liquidation threshold, respectively. When
the loan may be liquidated to maintain solvency.
Liquidation penalty
Liquidation penalty is a bonus applied to the price of collateral assets purchased by liquidators as part of the liquidation of a loan that has reached the liquidation threshold.
Reserve Factor
The reserve factor allocates a share of the protocol's interests to a collector contract as reserve for the ecosystem.
Risk Parameters
BSC Lending Pool
Reserve
Collateral
LTV
Threshold
Bonus
Reserve Factor
DAI
Yes
75%
80%
5%
10%
USDC
Yes
80%
85%
5%
10%
USDT
Yes
75%
80%
5%
10%
ETH
Yes
80%
82.5%
5%
10%
BNB
Yes
75%
80%
5%
15%
BTCB
Yes
70%
75%
9%
20%
BUSD
Yes
75%
80%
5%
10%
AAVE
Yes
70%
75%
5%
10%
ADA
Yes
70%
75%
5%
10%
CAKE
Yes
70%
75%
5%
20%
XRP
Yes
70%
75%
5%
20%
DOGE
Yes
55%
60%
8%
20%
DOT
Yes
70%
75%
5%
20%
XVS
Yes
60%
65%
5%
20%
FTM
Yes
75%
80%
5%
20%
FTM Lending Pool
Reserve
Collateral
LTV
Threshold
Bonus
Reserve Factor
DAI
Yes
75%
80%
5%
10%
USDC
Yes
80%
85%
5%
10%
USDT
Yes
75%
80%
5%
10%
ETH
Yes
80%
82.5%
5%
10%
BTC
Yes
70%
75%
9%
20%
FTM
Yes
75%
80%
5%
20%
ETH Lending Pool
Reserve
Collateral
LTV
Threshold
Bonus
Reserve Factor
DAI
Yes
75%
80%
5%
20%
USDC
Yes
80%
85%
5%
20%
USDT
Yes
75%
80%
5%
20%
ETH
Yes
80%
82.5%
5%
20%
BTC
Yes
70%
75%
9%
20%
Price Discovery
The frequency of price updates is determined by the liquidation strategy. We use a margin method, which means that prices are refreshed whenever the deviation exceeds a certain threshold. For the price feed, we rely on Chainlink's decentralized oracles.
Name
Symbol
Price updated every
Address
AAVE
AAVE
0.2%
https://data.chain.link/bsc/mainnet/crypto-usd/aave-usd
Last modified 4mo ago