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Key Terms

Annualized Percentage Return (APR)​

APR is the interest rate a user is expected to earn/pay over a year. This is a floating rate that will change as the utilization rate or interest rate model changes. Lenders and borrowers will each have their own respective APR in a given silo.

Total Value Locked (TVL)​

TVL is the total value of deposits for a given token in a given silo.

Total Value Borrowed (TVB)​

TVB is the total value of loans for a given token in a given silo.

Available to Borrow​

Available to borrow is the total amount of liquidity that a user may borrow of a given token in a given silo.

It can be written:

AvailableToBorrow=TVL−TVB−TVLcollateral−onlyAvailableToBorrow = TVL - TVB-TVL_{collateral-only}

Utilization​

Utlization is a ratio between funds available to borrow and TVL (less non-borrowable deposits)

It can be written:

Utilization=AvailableToBorrowTVL−TVLcollateral−onlyUtilization = \frac{AvailableToBorrow}{TVL - TVL_{collateral-only}}

Utilization defines APR based on a token's interest rate model.

##Current LTV (cLTV) cLTV is the current ratio of a position's loan to its collateral value.

It can be written:

cLTV=Loanvalue,currentCollateralvalue,currentcLTV = \frac{Loan_{value,current}}{Collateral_{value, current}}

A user's LTV will change over time as the price of the loan or collateral tokens change or interest is accrued.

Maximum Loan-to-Value Ratio (mLTV)​

mLTV is the maximum ratio at which a user may borrow against a given collateral represented as a percentage. Each collateral token in a silo will has its own mLTV.

Liquidation Threshold (LT)​

The Liquidation Threshold is the maximum LTV a position may be before it is signaled for liquidation, represented as a percentage. If a user's current LTV exceeds this, their a part, or full, collateral may be liquidated. Each collateral token in a silo has its own LT.

Health Factor​

The Health Factor is a value between 0 and 1 assigned to a borrow position, indicating how close it is to liquidation. A position may be liquidated at a Health Factor of 0.

It can be written:

HealthFactor=1−cLTVLTHealth Factor = 1-\frac{cLTV}{LT}

Health Factors are specific to users based on their current LTV and the liquidation threshold of the collateral token they are using.