Lending Metrics

General Parameters

  • Collateral c: The $ amount of deposits a trader owns
  • Debt d: The $ amount borrowed from the lender
  • Collateral factor cF: Determines how much borrow capacity a trader has when depositing an asset. Also described as Liquidation Threshold
  • Discounted Collateral: dC = sum of cF*(deposits in asset) for all assets
  • Borrow Capacity bC=dC-d: The $ amount a trader can borrow
  • Account Liquidation Threshold: lT=dC/c

Risk Metrics

  • Health Factor: hF=dC/d, if lower than 1, the account can be liquidated
  • LTV: ltv=c/d

Derived Values

  • Max Leverage in pair: l=1/(1-cfBuy); cfBuy = collateralFactor of Buy Asset
  • Max Open Size for pair: mO=bC*l=bC(1-cfBuy); cfBuy = collateralFactor of Buy Asset
  • Liquidation Price (ideally for assets paired with stablecoins, otherwise, one of the respective assets is assumed to have a constant price and _USD-values are replaced with raw balances):
    • Long: lP=sell_USD/(buy*cFBuy); sell_USDC=sell/borrow asset amount in USD; buy=purchase amount denominated in collateral/buy currency
    • Short: lP=buy_USD*cfBuy/sell; buy_USDC=buy/deposit asset amount in USD; sell=sell/borrow asset amount in sell currency

results matching ""

    No results matching ""