Glossary

Some terms used throughout the documentation may be unfamiliar to developers. Below we list some common terms that will help with your understanding.

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Term

Description

Loan To Value

The maximum borrowing power of a specific collateral. If a collateral has a Loan to Value of 75%, for every 1 ETH worth of collateral the user will be able to borrow 0.75 ETH worth of principal currency. The Loan To Value is specified per collateral and expressed in percentage points.

Liquidation Threshold

The threshold of a borrow position that will be considered undercollateralized and subject to liquidation. If a collateral has a liquidation threshold of 80%, it means that the loan will be liquidated when the debt value is worth 80% of the collateral value. The liquidation threshold is specified per collateral and expressed in percentage points.

Liquidation Bonus

The bonus received by liquidators to incentivise the purchase of specific collateral that has a health factor below 1. The Liquidation Bonus is specified per collateral and expressed in percentage points.

Health factor

Represents the ratio between total collateral multiplied by the liquidation threshold, and the borrowed principal. When the Health Factor goes below 1, the loan is undercollateralized and can be liquidated. Also see liquidationCall().

Stable rate

A loan with a stable rate behaves like a fixed rate loan in the short term, but the rates can be rebalanced following sudden market changes in the medium/long term.

Reserve

The address of the underlying asset.