Key Parameters
IronLend has a number of core parameters that allow mitigating market risks of the currencies supported by the protocol. Each loan is guaranteed by collateral that may be subject to volatility. Sufficient margin and incentives are needed for the loan to remain collateralized in adverse market conditions. If the value of the collateral falls below a threshold, a liquidation event occurs where part of it is auctioned to repay part of the loan and keep the ongoing loan collateralized.

Borrowable Assets (As of Monday, September 20, 12:00 UTC)

Token
ICE incentive per day
Collateral Factor
Reserve Factor
Liquidation Incentive
Base Rate per year
Multiplier
Kink
Jump multiplier
IRON
/
/
/
/
0%
0
0%
/
rDFYN
/
20%
30%
15%
0%
0.05x
80%
2.0
rMATIC
20,000
50%
25%
15%
2%
0.05x
100%
2.0x
rUSDC
90,308
75%
7%
15%
0%
0x
80%
1.0x
rUSDT
78,000
75%
7%
15%
0%
0x
80%
1.0x
rWBTC
20,000
65%
20%
15%
2%
0.1x
100%
/
rWETH
20,000
65%
20%
15%
2%
0.1x
100%
/
TOTAL
228,308

Collateral-Only Assets

Token
ICE incentive per day
Collateral Factor
Reserve Factor
Liquidation Incentive
Base Rate per year
Multiplier
Kink
Jump multiplier
rICE
20,000
20%
TOTAL
20,000

Total ICE incentives per day: 248,308.

Since some assets cannot be borrowed (only used as collateral), they do not have the key parameters that borrowable assets have.
Market risks can be mitigated through IronLend’s core parameters which define collateralization and liquidation rules. These parameters are calibrated per currency to account for the specific risks.
Overall, stablecoins are mostly used for borrowing, while volatile assets which users are long on are mostly used as collateral. Hence, the users of the protocol still gain great benefits from the addition of these stablecoins. Their risks are mitigated by the fact they cannot be used as collateral.

Utilization Rate

The percentage of a supplied asset that is currently borrowed. If there is 10 million MATIC supplied, and 7.5 million MATIC borrowed, then the utilization rate is 75%.

ICE Incentive per Day

The amount of daily ICE liquidity incentives paid to both lenders and borrowers of each rToken. 50% of the amount will go to lenders and borrowers each (equal split).

Collaterals and Collateral Factors

The Collateral Ratio is expressed in percentage: at CF=65%, for every 1 ETH worth of collateral, borrowers will be able to borrow 0.65 ETH worth of the corresponding currency.
Collateral Factor is effectively the liquidation threshold. If the value of the borrowed assets of an account exceeds the collateral factor of the lent assets, then the position is at risk of liquidation.
High price volatility of an asset can negatively affect collateral, threatening solvency of the IronLend protocol. The collateral must cover loan liabilities in order to remain solvent. The risk of the collateral falling below the loan amounts can be mitigated through the level of coverage required, otherwise known as the Collateral Factor. It also affects the liquidation process as the margin for liquidators needs to allow for profit.
The least-volatile currencies are stablecoins and thus they have the highest Collateral Factor. They are followed by blue-chip tokens such as BTC, ETH and MATIC with Collateral Factors in the range 50-65%. The most volatile currencies have the lowest Collateral Factor (50% or less) to protect our users from a sharp drop in price which could lead to undercollaterisation followed by liquidation.

Reserve Factor

The reserve factor is the parameter that controls how much of the interest for a given asset is routed to that asset's Reserve Pool. It allocates a share of the protocol's interests to a collector contract as a reserve for the ecosystem. The purpose of this contract is to sustain the IronLend reserve pool.
Iron Finance’s solvency risk is covered by its Reserve Factor, with the incentives coming from the ecosystem reserve. As such, the Reserve Factor is also a risk premium and so it is calibrated based on the overall risk of the asset. Stablecoins are the less risky assets with lower reserve factor while volatile assets hold more risk with a higher factor.

Liquidation Incentive

A user who has negative account liquidity is subject to liquidation by other users of the protocol to return his/her account liquidity back to positive (i.e. above the collateral requirement). When a liquidation occurs, a liquidator may repay some or all of an outstanding borrow on behalf of a borrower and in return receive a discounted amount of collateral held by the borrower; this discount is defined as the liquidation incentive.

Base Rate per Year

The minimum APY% when the utilization rate is zero.

Multiplier

The rate of increase in interest rate with regards to utilization rate, as long as the utilization rate is less than or equal to the Kink.

Kink

Liquidity risk occurs when utilization rates get too high. To combat this, the interest-rate curve can be split in two parts around an optimal utilization rate. The point that splits this curve is called the Kink.
Worded differently, the Kink is the optimal borrow rate, after which interest rates will rise sharply.
    When the utilization rate (borrow rate) is less than or equal to the Kink, interest rates are low to encourage loans. Rates increase slowly with increased utilization (borrowing)
    When the utilization rate is above the Kink, interest rates are high to encourage repayments of loans and additional deposits. Rates rise quickly with increased utilization.

Jump Multiplier

The rate of increase in interest rate with regards to utilization rate, once the ultilization rate is greater than the Kink.

Example Interest Rate Models

An example of the USDC interest rate model, with a current utilization rate of 61%. The Kink in this example is set to 80%, meaning when utilization is greater than 80%, interest rates will suddenly rise more sharply.
An example of the WETH interest rate model with a current utilization rate of 41%. Note that since the Kink is set to 100%, there is no sudden rise in interest rates at higher utilization rates.
Last modified 27d ago