Asset Parameters

Rates formation and liquidation properties

Each asset supported is configured by different Interest Rate Model parameters(ABCD), Borrow Power(or Loan-to-value), Liquidation Threshold, Liquidation Penalty and Reserve Factor.

Interest Rate Model

ABCD parameters define interest rate model as a function between current utilisation and borrow APR. Graphically, it's a line of 2 segments: the first goes from (0,A) to (B,C); the second goes from (B,C) to (1, D), where X coordinate is current utilisation of the asset defined as TotalBorrow/TotalDeposit, Y coordinate defines Borrow APR and Deposit APR:

$Utilisation = TotalBorrow/TotalDeposit \\ BorrowAPR = ABCD(Utilisation) \\ SupplyAPR = BorrowAPR * Utilisation * (1 - ReserveFactor)$

Learn the difference between APY and APR here.

Sample Interest rate model: with 11% utilisation rate, BorrowAPR is 11.5%, SupplyAPR is 1.1%

Reserve Factor defines which portion of accumulated interest go to system reserves to ensure liquidity is always there when needed.

Borrow Limits

Collateral Factor defines the capacity of the asset as collateral.

Liquidation Threshold defines the reserve margin when the Account health would be considered low enough to start liquidation.

Liquidation Penalty defines the extra premium liquidator deducts from the deposit of the liquidated loan borrower.

During initial launch, Collateral Factor and Liquidation threshold are set to low values. These parameters will be levelled up to increase Borrow Limits for all deposits.

Current asset parameters can be found in the asset details.