Glosary

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

Term	Description
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.
Oracle	Third party on-chain service to get asset price
APR	Yearly cost of borrowing money, including interest and fees, but doesn't include how interest can build up over the year.
APY	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.