| Parameter | Description |
|---|---|
| Collateral asset | Asset borrowers lock (e.g., HYPE, ETH, BTC) |
| Loan asset | Asset lenders supply and borrowers receive (e.g., USDC, USDT0) |
| LLTV | Liquidation Loan-to-Value, threshold at which positions become liquidatable |
| Oracle | Price feed used to value collateral |
| IRM | Interest Rate Model, determines rates based on utilization |
Utilization
Utilization is the ratio of borrowed assets to total supplied assets:
Utilization = Total Borrowed / Total Supplied
Supply APY = Borrow APY × Utilization
Utilization drives rates. Higher utilization means higher rates. Lower utilization means lower rates.
Liquidity
Available liquidity = Total Supplied - Total Borrowed
This is what’s actually can be borrowed at any moment. When utilization is high, available liquidity is low.
Price Per Share (PPS)
Lenders receive shares representing their claim on the pool. As interest accrues, total assets grow while shares stay constant. The ratio (assets/shares) increases over time. This is how yield is realized without explicit payments.
Isolation
Markets are isolated. A WHYPE/USDC market and a kHYPE/USDC market share nothing: different collateral, different risk parameters, different utilization. Bad debt in one market does not affect others.