Liqudation Threashold

The Liquidation Threshold is a critical parameter that defines the point at which a borrower’s collateral is deemed insufficient to cover the loan, triggering a liquidation process.

The liquidation threshold matrix is updated at regular intervals to mirror real-time market dynamics and asset performance.

Similar to LTV adjustments, any updates to the liquidation threshold are enacted one hour after being recorded in the protocol. This delay ensures stability and provides users with sufficient time to respond to changes.

Our warning service actively notifies users about impending liquidation risks, allowing them to take corrective measures such as adding more collateral or repaying part of the loan.

The liquidation threshold incorporates a category parameter that factors in:

• Token Distribution Time: Evaluates how long a token has been in circulation, impacting its perceived reliability.

• Token Type: Differentiates between token types to account for their unique risk profiles.

• Baseline and Volatility: While volatility remains the main risk driver, the category parameter provides an additional layer of assessment, ensuring that thresholds are tailored to each token’s characteristics.

Historical Stability

Lentum's efficient management has resulted in a low incidence of liquidations, thanks to:

• Adaptive Thresholds: Regularly updated thresholds adapt to market changes

• User Empowerment: Timely alerts enable users to manage their positions proactively

Benefits to Users and the Protocol

• Risk Mitigation: Proper threshold management safeguards both user assets and the protocol’s financial health.

• Enhanced User Experience: Users are equipped with timely information to make informed decisions, fostering trust and engagement.