Protocol Parameters

The core parameters of Eralend

TokenCollateral FactorClose FactorLiquidation IncentiveReserve Factor











Collateral Factor:

This represents the maximum amount of the asset that can be used as collateral relative to the value of the loan. For example: If the collateral factor for an asset is 50%, then a user can only borrow up to 50% of the value of the collateral asset. This varies based on the risk associated with the collateral asset.

Liquidation Incentives:

Liquidation incentives are rewards offered to users who help prevent the system from becoming undercollateralized by participating in the liquidation process of collateralized loans. These rewards incentivize users to act in the best interest of the system and help maintain its stability.

Reserve Factor:

It refers to the percentage of interest earned on loans that are set aside as a reserve fund. This reserve fund is used to cover potential losses from defaults or liquidations. The reserve factor is used to ensure the stability of the protocol and protect lenders from any unexpected losses. A higher reserve factor means a larger reserve fund, which can provide more protection for lenders.

Close Factor:

This represents the maximum amount that can be liquidated in a single transaction e.g. 50% close factor means that a maximum of 50% of an account's borrow can be liquidated in a single liquidate transaction.

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