# Asset Parameters

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:

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

{% hint style="info" %}
Learn the difference between APY and APR [here](https://docs.vires.finance/knowledgebase/apy-vs-apr).
{% endhint %}

![Sample Interest rate model: with 11% utilisation rate, BorrowAPR is 11.5%, SupplyAPR is 1.1%](https://1897045562-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MbfmWt68vgemh1chTQK%2Fsync%2Ff2a7e371bb297c396a225b380533e2bc52626390.png?generation=1623158604393955\&alt=media)

**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.

{% hint style="info" %}
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.
{% endhint %}

*Current asset parameters can be found in the asset details.*