Some terms used throughout the documentation may be unfamiliar to developers. Below we list some common terms that will help with your understanding.



Liquidation Reserve Factor

The Liquidation Reserve Factor is the percentage of the liquidation proceeds that is allocated to a specific reserve, such as the scallop treasury, in the context of a liquidation event.

Liquidation Factor

Risk parameter that determines when collateral assets need to be liquidated to maintain the financial health of the protocol. This parameter sets a minimum ratio between the value of the collateral and the value of the loan, where if the value of the collateral falls below this threshold, the collateral assets will be sold to repay the loan.

Obligation Account

Obligation is account will hold your information about your collateral asset and borrowing information.


Third party on-chain service to get asset price


Yearly cost of borrowing money, including interest and fees, but doesn't include how interest can build up over the year.


Yield or Interest after a year includes the effect of compounding

Risk Level

Indicates the security status of your obligation account, calculated based on "borrowValueWithWeight" divided by "requireCollateralValue". A reading of 100% indicates that the liquidation threshold has been reached; it remains at 100% even if exceeded.

Liquidation Threshold

The liquidation threshold is when a loan gets liquidated if the debt reaches Liquidation Factor of the collateral's value. It varies by collateral and is shown in percentage.

Utilization Rate

The utilization rate in lending shows how much of the available money is being borrowed. If it's high, it means most of the money is lent out; if it's low, more money is available. This rate helps set how much interest borrowers pay and savers earn.

Liquidation Penalty

The liquidation penalty is a fee taken from the collateral value when it's sold to cover the borrower's debt. For example, if there's a 10% penalty, and $100 of collateral is sold, only $90 is used to pay off the debt, with the remaining $10 acting as the penalty.

Liquidation Discount

Liquidators receive collateral by paying off debt that has been reduced by a discount, meaning when they settle the debt, they acquire the collateral at a lower price as a reward for their service.

Collateral Factor

The collateral factor is the maximum percentage of an asset's value that can be borrowed against it. For instance, with a 70% collateral factor for BTC, a borrower with $100 worth of BTC can borrow up to $70.

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