Understanding Umee’s 20+ Leverage Module Parameters
Umee continues to make a name for itself as the world's first and most programmable DeFi lending protocol in the cosmos ecosystem. This is a deliberate design feature that ensures the safety of user funds. Today we would like to take some time to discuss some of the leverage-related parameters and what they contribute to the platform's usability. Consider this a glossary of parameters that you can reference or study to grow your knowledge of Umee as a platform.
Denomination Parameters:
Base Denom: This parameter denotes the denomination of the underlying base token.
Symbol Denom: This parameter designates the human-readable denomination of this token.
Exponent: This parameter is used to convert an amount of the token denoted in its symbol denom to the actual amount of its base denom.
Rate and Utilization Parameters
Base Borrow Rate: This parameter defines the minimum interest rate for borrowing an asset.
Kink Borrow Rate: This protocol parameter defines the interest rate for borrowing an asset when supply utilization is equal to 'kink_utilization'.
Max Borrow Rate: This parameter defines the interest rate for borrowing an asset when supply utilization is at its maximum.
Min_Collateral Liquidity: Liquidity can only drop below this value due to interest or liquidations. The goal is to ensure that there are enough available (not borrowed) tokens for withdrawal when there is a collateral liquidation and the liquidator needs to withdraw uToken.
Kink Utilization: This parameter represents the supply utilization value where the kink in the borrow interest rate function occurs.
Max Supply Utilization: This is the maximum amount of tokens the protocol can hold. Adding more supply of the given token to the protocol will return an error. 0 means that there is no limit.
Threshold Parameters
Complete Liquidation Threshold: This parameter determines how far between liquidation_threshold (LT) and collateral_value (CV) a borrower's borrowed value must have progressed to allow for a full liquidation.
Liquidation Threshold: This parameter denotes what amount of the total value of the asset as collateral can contribute to a user's liquidation threshold.
Liquidation Parameters
Small Liquidation Size: This is the USD value at which a borrow is considered small enough to be liquidated in a single transaction, bypassing the dynamic close factor.
Direct Liquidation Fee: This is a reduction factor in liquidation incentive experienced by liquidators who choose to receive base assets instead of uTokens as liquidation rewards.
Liquidation Incentive: This parameter determines the portion of bonus collateral that token-type liquidators receive as a liquidation reward.
Factor Parameters
Close Factor: This parameter determines the portion of a borrower's position that can be liquidated in a single event.
Oracle Reward Factor: This parameter dictates the portion of interest accrued on borrows that
are sent to the oracle module to fund its reward pool.
Reserve Factor: This parameter defines what portion of accrued interest goes to reserves when this token is borrowed.
Collateral Parameters
Collateral Weight: This parameter defines what portion of the total value of the asset can contribute to a user's borrowing power.
Max Collateral Share: This parameter specifies how much of the system's overall collateral can be provided by a given token.
Other Parameters
Token: This parameter defines a token, along with its metadata and parameters, in the Umee capital facility that can be supplied and borrowed.
Historic Medians: This is the number of median historic prices to request from the oracle module when evaluating new borrow positions containing this token. The default value of zero for this field causes the current price to be used in those calculations for the affected Token.
Enable Msg Supply: This parameter allows supplying for lending or collateral using this token.
Enable Msg Borrow: This parameter allows the borrowing of this token.
Blacklist: This parameter completely eliminates an asset.
Conclusion
We hope this lexicon of terms and their definition helps show the amount of care and effort we take in designing a lending platform that is both intuitive to use and safe for its users. Thank you for tagging along with us in this journey and making Umee your #1 platform for all your lending and borrowing activities.
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