Configurations and Restrictions

• Max LTV and Liquidation LTV are configurable parameters for each whitelisted collateral asset. These parameters exist to protect the protocol from allowing more debt to be taken out relative to the value of its collateral asset than is considered safe in order to minimize the likelihood of extreme short term volatility sending value of collateral below that of debt before it can be liquidated.

• Deposit caps are configurable parameters for each lendable and borrowable asset that limit the amount of tokens that can be lent or borrowed. This parameter exists to protect the protocol from allowing more leverage to be taken out in the system than it can safely manage to liquidate in a reasonable time horizon.

• Collateral caps are configurable parameters for each whitelisted collateral asset that limits the amount of a particular asset that can be used as collateral to borrow against. This parameter exists to reduce the risk of bad debt to lenders by being able to minimise exposure to riskier collateral within a particular market.

• Protocol sets configurable thresholds for private liquidations that are meant to reduce max swap size, price impact and slippage when selling collateral for debt tokens.

• • Routes that involve CPMM utilize a percent price impact threshold, while routes that involve Stableswap utilize a swap size threshold based on % of TVL in pairs due to computational constraints. Swaps for private liquidations that involve both CPMM and concentrated liquidity curves must meet both percent price impact and percent of TVL requirements.

• Bridged versions of natively issued assets should have collateral cap that is a function of natively issued asset collateral cap.

• Multiple markets can be launched to isolate risk associated with particular types of collateral or lendable/borrowable assets.

Methodologies for calculating Max LTV, Liquidation LTV and Deposit Caps will be linked here in the future.