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Borrowing Parameters

Every token in a given silo has a defined maximum Loan to Value (mLTV) and Liquidation Threshold LT that define the borrowing power and solvency requirements of that token.

maximum Loan to Value example

In this example, stS has an mLTV of 95% and an LT of 97%. This means a user can borrow 95% of their stS deposit and they might experience partial liquidation if the loan value exceeds 97% of their collateral value.

LTV​

LTV is the current loan-to-value ratio of a user's position given by:

LTV=Loanvalue,currentCollateralvalue,currentLTV = \frac{Loan_{value,current}}{Collateral_{value, current}}

Events that can change a user's LTV include:

  • New deposits, withdrawals, loans, and repayments
  • Change in loan token's price
  • Change in collateral token's price
  • Interest earned on collateral
  • Interest paid on loan

mLTV​

mLTV is a token's maximum LTV, indicating its maximum borrowing power.

An mLTV of 95% means a user can borrow 95c per $1.00 in collateral.

If a position has exceeded its mLTV, additional tokens cannot be borrowed unless collateral is added.

LT​

LT is the token's liquidation threshold, indicating the maximum LTV a position can have before it is signaled for liquidation.

An LT of 97% means a user may be liquidated if their LTV exceeds 97%.

Users may improve their LTV by depositing more collateral or repaying their loans.