Glossary
Some terms that are a basis for understanding how the Lending Protocol works may be unfamiliar to a new user. Below the terms that will help anyone understand how the Lending Protocol works are listed. Moreover, this glossary standardizes the terms to make communication in the whole Abax community easier.
Blockchain native terms
| term | description |
|---|---|
account | |
smart contract | |
PSP22 | A standard of a smart contract that manages balances of a fungible asset represented on on substrate blockchains: https://github.com/w3f/PSPs/blob/master/PSPs/psp-22.md |
Lending Pool terms
| term | description |
|---|---|
Asset | A PSP22 smart contract. |
Lending Pool | A smart contract that allows users to deposit and borrow assets. |
reserve | A Lending Pool is divided into the reserves. Each reserve is responsible for managing one asset. For example, there is BTC reserve, ETH reserve, USDT reserve, etc. |
deposit | Assets of an account that were transferred on the account's behalf to the Lending Pool during the Lending Pool 'deposit' function execution plus the accumulated yield interest. |
collateral | Deposits of an account that were selected by the account to secure the account's debts. |
debt | Assets that were borrowed on behalf of an account from the Lending Pool during the Lending Pool 'borrow' function execution plus the accumulated debt interest. |
reserve utilization rate | A ratio of all deposits to all debts in the reserve. |
debt interest rate | An interest rate that is accumulated on the debt. The rate depends on the reserve utilization rate. The higher the utilization the higher the rate. |
yield interest rate | An interest rate that is accumulated on the deposit. The rate depends on the reserve utilization rate. The yield comes from dividing the debt interest rate paid by borrowers among the lenders. |
Collateral Coefficient | A non-negative value smaller than 1 which denotes the collateral's ability to cover the debt. The higher the value the more one can borrow against the collateral. Read more... |
Collateral Power | A total measure of an account's ability to borrow that is generated by all the account's collaterals. Read more... |
Debt Coefficient | A greater than 1 value which denotes the debt's requirements for the collateral. The higher the value the more the debt requires Collateral Power. Read more... |
Debt Power | A total measure of an account's required Collateral Power to cover the account's debts. Read more... |
Health Factor | A measure of liquidation risk of an account against assets' price changes. It is a ratio of Debt Power to Collateral Power. The higher the value than 1 the less risk an account being liquidated. Read more... |
Collateralized | An account is collateralized if its Collateral Power is greater or equal to its Debt Power. In other words, if the account's Health Factor is greater or equal to 1. |
Liquidation | A process of selling an account's collateral to repay the account's debt when the account is not collateralized during the Lending Pool 'liquidate' function execution. Read more... |
Liquidation penalty | Excess of collateral that is sold during liquidation to incentivize liquidators. Read more... |
Lending Pool actors types
| actor | description |
|---|---|
Depositor | An account that deposits assets into the Lending Pool. |
Borrower | An account that borrows assets from the Lending Pool against collateral. |
Flash Borrower | An account that borrows assets from the Lending Pool and repays the debt in one transaction. |
Liquidator | An account that liquidates the position of undercollateralized accounts. |
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